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Waste Management Shows Promise with Core Business Focus

On Sep 24, Zacks Investment Research updated the research report on leading comprehensive waste management services provider Waste Management, Inc.WM .

Waste Management is executing well on its initiatives to refocus on the core business activities and instil price and cost discipline to achieve better margins. The company aims to focus on improving customer retention by providing better service and higher value solutions.

At the same time, Waste Management's successful cost reduction initiatives have helped it in accomplishing remarkable gross margin expansion and EBITDA growth. The company is undertaking several steps to further boost its margins - one of which is by charging for recycling glass. Glass packaging is the third-largest market in the recycled material packaging segment, and is expected to grow at a steady pace in the coming quarters. With its new strategy, Waste Management stands to gain on two fronts - from the growth in the addressable market and also from the additional revenues arising from recycling glass.

In the last reported quarter, the company completed the acquisition of Deffenbaugh Disposal, which is likely to be accretive to earnings going forward. The acquisition of Deffenbaugh at an undisclosed price will further help Waste Management to replace revenues lost from the divesture of Wheelabrator. With 1.7 million tons of waste and recyclable material collections in 2013, Deffenbaugh is a strategic fit for Waste Management and will enable it to focus on its core businesses. The transaction also enables Waste Management to extend its geographic footprint and make a foray in the attractive market of Kansas City, where it has limited presence.

Furthermore, the company has a dominant market capitalization and a steady annual dividend policy. Waste Management plans to return significant cash to shareholders through healthy dividends and share repurchases in the future quarters as well. These initiatives boost shareholders' returns in the long term.

Waste Management currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look in the broader Services Industry include Republic Services, Inc. RSG , The Hackett Group, Inc. HCKT and Cintas Corporation CTAS , each carrying a Zacks Rank #2 (Buy).

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WASTE MGMT-NEW (WM): Free Stock Analysis Report

CINTAS CORP (CTAS): Free Stock Analysis Report

REPUBLIC SVCS (RSG): Free Stock Analysis Report

HACKETT GROUP (HCKT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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