Yahoo Finance Zacks Industry Outlook Highlights Republic Services, Clean Harbors and Core & Main
For Immediate Release
Chicago, IL – December 5, 2022 – Today, Zacks Equity Research discusses Republic Services, Inc. RSG, Clean Harbors, Inc. CLH and Core & Main, Inc. CNM.
Industry: Waste Removal
Link: https://www.zacks.com/commentary/2024802/3-waste-removal-services-stocks-to-watch-amid-industry-challenges
The Zacks Waste Removal Services industry stands to benefit from the gradual resumption of business activities and reopening of the economy, which have led to increased waste production from industrial and commercial sectors. Government initiatives for sustainable waste management, increasing environmental awareness, rising population, rapid industrialization and urbanization and growing adoption of advanced waste collection solutions are the other positives.
Republic Services, Inc., Clean Harbors, Inc. and Core & Main, Inc. are some stocks likely to gain from the abovementioned factors.
Industry Description
The Zacks Waste Removal Services industry comprises companies engaged in the collection, transportation, treatment, disposal, inspection and regulation of any form of waste. The companies serve residential, municipal, commercial and industrial customers in the United States and internationally.
Some industry participants provide non-hazardous solid waste collection, transfer, recycling, disposal, and energy services for small-container, large-container, municipal and residential, and energy services customers in the United States and Puerto Rico, while others provide waste management environmental services to residential, commercial, industrial, and municipal customers in North America. Some industry players operate as environmental infrastructure and solutions companies, providing water handling and recycling solutions.
What's Shaping the Future of Waste Removal Services Industry?
A Healthy Demand Environment: The industry is mature, with growth coming from volume and price increases. Income has grown steadily over the past few years, enabling most industry players to pursue acquisitions and other investments.
The Uptick in Economic Activities Bodes Well: With the reopening of the economy and the resumption of business activities, waste generation is bound to increase, especially in industrial and commercial sectors. Despite the decline in COVID-19 cases, proper disposal of medical waste will always remain an utmost priority to curb the spread of infection.
Increases in population, industrialization and urbanization should remain the key drivers of the industry as these lead to a significant rise in garbage and recycling. Also, the use of advanced collection and recycling solutions is expected to pick up pace. This should enhance business opportunities for waste management companies.
Government initiatives as well as stringent rules and regulations to advance sustainable waste management mechanisms and put a check on illegal dumping are also expected to boost the industry.
High Operating Costs a Woe: Given that waste management is both a time-consuming and complex process, it requires higher capital and operating costs to manage waste collection vehicles, bins, and processing equipment along with a huge number of workers. Such high operational expenses are likely to keep the bottom line of the companies in this industrial cohort under pressure.
Zacks Industry Rank Indicates Gloomy Prospects
The Zacks Waste Removal Services industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #138. This rank places it in the bottom 45% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Despite the cloudy prospects, we present a few stocks that investors can buy or retain given their sturdy potential. But before that let’s take a look at the industry’s recent stock market performance and its current valuation.
Industry's Performance
The Zacks Waste Removal Services industry has outperformed the broader Zacks Business Services sector and the Zacks S&P 500 composite over the past year.
The industry has declined 6.3% over this period compared with 35.6% decline of the broader sector and 11.7% decline of the Zacks S&P 500 composite.
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing waste removal services stocks because of their high debt levels, the industry is currently trading at 13.99X compared with the S&P 500’s 12.4X and the sector’s 24.11X.
Over the past five years, the industry has traded as high as 14.82X, as low as 8.57X and at the median of 11.88X.
3 Waste Removal Services Stocks to Keep a Close Eye On
Core & Main: This Zacks Rank #2 (Buy) Missouri-based company distributes water, wastewater, storm drainage, and fire protection products and related services to municipalities, private water companies, and professional contractors in the municipal, non-residential, and residential end markets in the United States.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Core & Main has been benefiting from solid demand across each of its end markets, backed by continued growth in municipal water infrastructure spending, growth in land and development due to continued housing demand, and recovery in the non-residential construction market.
Despite the ongoing inflationary trends across many of its product lines due to supply chain constraints and product availability challenges, the company kept floating through its reliable products and services. The company’s active M&A strategy has been helping it expand into new geographies, access new product lines, consolidate existing market positions and add key talent. In addition, higher net sales and cost-control initiatives will likely drive margins.
The Zacks Consensus Estimate for CNM 2022 EPS has moved up 15.5% in the past 90 days. CNM stock has declined 22% over the past year.
Clean Harbors: This Zacks Rank #2 Massachusetts-based company provides environmental, and industrial services in North America.
Clean Harbors focuses on improving its efficiency and lowering operating costs through enhanced technology, process efficiencies and stringent cost management. It continues to make capital investments to enhance its service quality and comply with government and local regulations. Buyouts help the company expand its business across multiple lines of services. Consistency in rewarding shareholders through share buybacks boosts investor confidence and positively impacts earnings per share.
The Zacks Consensus Estimate for CLH’s 2022 EPS has moved up 7.1% in the past 90 days. CLH stock has gained 17.6% over the past year.
Republic Services: This Zacks Rank #3 (Hold) Arizona-based company provides non-hazardous solid waste collection, transfer, recycling, disposal, and energy services for small-container, large-container, municipal and residential, and energy services customers in the United States and Puerto Rico.
The positive impact of acquisitions and internal growth has been aiding the company’s top-line growth. Republic Services is focused on increasing its operational efficiency by shifting to compressed natural gas collection vehicles and converting rear-loading trucks to automated-side loaders to reduce costs and improve profitability. Consistency in dividend payments and share buybacks not only boost investor confidence but also positively impact earnings per share.
The Zacks Consensus Estimate for RSG’s 2022 EPS has improved 0.8% in the past 90 days. RSG stock has gained 2.7% over the past year.
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Republic Services, Inc. (RSG) : Free Stock Analysis Report
Clean Harbors, Inc. (CLH) : Free Stock Analysis Report
Core & Main, Inc. (CNM) : Free Stock Analysis Report
