Waste Management ( WM ) isn't just in the business of picking up your trash and taking it to the dump. It's constantly on the lookout for ways to find new uses for the stuff we throw away and is working with major companies to do that.
WithWhole Foods ( WFM ), it helped set up a program to turn food waste into soil enrichment products. Starting with two Chicago-area stores, it replaced trash compactors with composting containers. In the first year, diversion rates rose from 10% to 80%, and more than 2,660 tons of food scraps were composted.
It helpedAlcoa ( AA ) make $500,000 from what it once threw away. Aluminum production at its Massena, N.Y., plant produced excess aluminum oxide, which was perfectly useable, but the company didn't have a way to recover the fine powder, which was swept up and thrown away.
With Waste Management, Alcoa developed a plan to reclaim 20 to 25 tons of aluminum oxide each week.
Waste Management is a mature company that doesn't grow as fast as it once did. Its five-year annualized EPS growth rate is 1%. But analysts expect 10% growth this year and 8% in 2015. It has an Earnings Stability Factor of 3 on a 0 to 99 scale, where low numbers correspond to steady earnings growth.
In 2013, Waste Management had a return on equity of 17%, although the long-term debt-to-equity ratio was 166%. Pretax profit margins were 11.2%.
In the most recent quarter, earnings grew at a 23% clip, the biggest increase in more than three years. Analysts are forecasting a 9% increase in the next report.
On May 6, the company announced it will pay a 37.5-cent-per-share dividend on June 20 to shareholders of record June 6. That works out to a 3.4% annual rate.
Though not a growth stock, Waste Management has set up in a cup-with-handle base.