Waste Management, Inc
) is scheduled to report second-quarter 2014 results before the
opening bell on Jul 29. In the last reported quarter, Waste
Management's earnings comfortably beat the Zacks Consensus Estimate
by 4 cents. Let's see how things are shaping up for this
Factors to Consider
Waste Management expects healthy yield improvement in its solid
waste-line business with a decent yield momentum in the forthcoming
quarters. The company expects to invest $100 million to $250
million on tuck-in acquisitions in traditional waste operations in
Recently, credit rating firm Moody's also upgraded the rating
for senior unsecured debt of the company by one notch to Baa2. The
upgrade affects approximately $8.5 billion of the company's debt.
It reflects prudent capital discipline at Waste Management with
reduced capital expenditure and optimal utilization of free cash
flow to fund share repurchases.
However, the company expects volumes to be down due to lower
national counts as they strive for improved margin growth and
pricing. The pricing environment remains challenging and highly
competitive due to aggressive bidding by smaller competitors. The
company needs to improve margins on the recycling side through
adjustment of rebates to reflect lower pricing and also needs to
improve the quality of inbound material to improve
Our proven model does not conclusively show that Waste
Management will beat the Zacks Consensus Estimate this quarter.
This is because a stock needs to have both a positive Earnings ESP
and a Zacks Rank #1, #2 or #3 for this to happen. This is not the
case here as you will see below.
Zacks ESP: The
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is pegged at 0.00%. This
is because both the Most Accurate estimate and Zacks Consensus
Estimate currently stand at 59 cents.
Zacks Rank #2 (Buy): Waste Management's Zacks Rank #2 (Buy) when
combined with 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some companies you may want to consider as our model
shows that they have the right combination of elements to post an
earnings beat in the future.
Arch Capital Group Ltd
) earnings ESP of +5.10% and Zacks Rank #2 (Buy).
) earnings ESP of +1.90% and Zacks Rank #2 (Buy).
Clayton Williams Energy, Inc
), earnings ESP of +4.46% and Zacks Rank #1. (Strong Buy).
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