Waste Management (NYSE: WM) and Republic Services (NYSE:RSG) are both large-cap business services companies, but which is the superior stock? We will compare the two companies based on the strength of their profitabiliy, risk, analyst recommendations, dividends, earnings, institutional ownership and valuation.
Valuation & Earnings
This table compares Waste Management and Republic Services’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Waste Management||$13.87 billion||2.37||$3.78 billion||$2.74||27.19|
|Republic Services||$9.53 billion||2.29||$2.68 billion||$1.87||34.57|
Waste Management has higher revenue and earnings than Republic Services. Waste Management is trading at a lower price-to-earnings ratio than Republic Services, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings for Waste Management and Republic Services, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Waste Management currently has a consensus target price of $73.58, indicating a potential downside of 1.23%. Republic Services has a consensus target price of $66.44, indicating a potential upside of 2.79%. Given Republic Services’ higher possible upside, analysts clearly believe Republic Services is more favorable than Waste Management.
Waste Management pays an annual dividend of $1.70 per share and has a dividend yield of 2.3%. Republic Services pays an annual dividend of $1.28 per share and has a dividend yield of 2.0%. Waste Management pays out 62.0% of its earnings in the form of a dividend. Republic Services pays out 68.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Waste Management has raised its dividend for 13 consecutive years and Republic Services has raised its dividend for 7 consecutive years. Waste Management is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Waste Management and Republic Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk and Volatility
Waste Management has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, Republic Services has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.
Institutional & Insider Ownership
75.0% of Waste Management shares are held by institutional investors. Comparatively, 61.3% of Republic Services shares are held by institutional investors. 0.2% of Waste Management shares are held by company insiders. Comparatively, 0.4% of Republic Services shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Waste Management beats Republic Services on 14 of the 17 factors compared between the two stocks.
Waste Management Company Profile
Waste Management, Inc. (WM) is a holding company. The Company, through its subsidiaries, is a provider of waste management environmental services. The Company’s segments include Solid Waste and Other. The Company’s Solid Waste segment includes its solid waste business. The Other segment includes its Strategic Business Solutions (WMSBS) organization; its landfill gas-to-energy operations and third-party subcontract and administration services managed by its Energy and Environmental Services and WM Renewable Energy organizations; its recycling brokerage services, and its service offerings and solutions, such as portable self-storage and long distance moving services, fluorescent lamp recycling and interests it holds in oil and gas producing properties. As of December 31, 2016, the Company owned or operated 243 solid waste landfills and five secure hazardous waste landfills. Its recycling brokerage services involve managing the marketing of recyclable materials for third parties.
Republic Services Company Profile
Republic Services, Inc. is a provider of non-hazardous solid waste collection, transfer, disposal, recycling and energy services. The Company’s segments include Group 1, Group 2 and Corporate entities. Its Group 1 and Group 2 segments provide integrated waste management services. Group 1 consists of geographic areas located in the western and portions of the mid-western United States. Group 2 consists of geographic areas located in Texas, the southeastern and portions of the mid-western United States, and the eastern seaboard of the United States. As of December 31, 2016, it operated in 39 states and Puerto Rico through 333 collection operations, 204 transfer stations, 192 active landfills, 64 recycling centers, seven treatment, recovery and disposal facilities, and 10 salt water disposal wells. As of December 31, 2016, it also operated 71 landfill gas and renewable energy projects and had post-closure responsibility for 124 closed landfills.
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