Q4 Earnings Review: Waste Management Stocks Led by Casella Waste Systems (NASDAQ:CWST)
As the Q4 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the waste management industry, including Casella Waste Systems (NASDAQ:CWST) and its peers.
Waste management companies can possess licenses permitting them to handle hazardous materials. Furthermore, many services are performed through contracts and statutorily mandated, non-discretionary, or recurring, leading to more predictable revenue streams. However, regulation can be a headwind, rendering existing services obsolete or forcing companies to invest precious capital to comply with new, more environmentally-friendly rules. Lastly, waste management companies are at the whim of economic cycles. Interest rates, for example, can greatly impact industrial production or commercial projects that create waste and byproducts.
The 9 waste management stocks we track reported a slower Q4. As a group, revenues missed analysts’ consensus estimates by 1.2%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 15.6% since the latest earnings results.
Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ:CWST) offers waste management services for businesses, residents, and the government.
Casella Waste Systems reported revenues of $427.5 million, up 18.9% year on year. This print exceeded analysts’ expectations by 2.3%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
“We finished the year strong, reporting records yet again across our key financial metrics in 2024, with growth of over 20% in revenues, Adjusted EBITDA and Adjusted Free Cash Flow,” said John W. Casella, Chairman and CEO of Casella Waste Systems,
Casella Waste Systems Total Revenue
Casella Waste Systems scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 5.4% since reporting and currently trades at $101.07.
Processing several million tons of recyclables annually, Republic (NYSE:RSG) provides waste management services for residences, companies, and municipalities.
Republic Services reported revenues of $4.05 billion, up 5.6% year on year, falling short of analysts’ expectations by 0.7%. However, the business still had a satisfactory quarter with an impressive beat of analysts’ EPS estimates but a slight miss of analysts’ sales volume estimates.
Republic Services Total Revenue
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $226.28.
Perma-Fix reported revenues of $14.7 million, down 35.3% year on year, falling short of analysts’ expectations by 6.9%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Perma-Fix delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 5.9% since the results and currently trades at $6.82.
Operating a network of municipal solid waste landfills in the U.S. and Canada, Waste Connections (NYSE:WCN) is North America’s third-largest waste management company providing collection, disposal, and recycling services.
Waste Connections reported revenues of $2.26 billion, up 11% year on year. This number topped analysts’ expectations by 0.8%. Aside from that, it was a mixed quarter as it also produced an impressive beat of analysts’ adjusted operating income estimates but a miss of analysts’ EPS estimates.
The stock is down 4.3% since reporting and currently trades at $181.51.
Headquartered in Houston, Waste Management (NYSE:WM) is a provider of comprehensive waste management services in North America.
Waste Management reported revenues of $5.89 billion, up 13% year on year. This result surpassed analysts’ expectations by 0.9%. Taking a step back, it was a slower quarter as it produced a significant miss of analysts’ adjusted operating income and EPS estimates.
The stock is up 4.4% since reporting and currently trades at $219.03.
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn’t slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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