As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the waste management industry, including Waste Connections (NYSE:WCN) 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 Q2. As a group, revenues missed analysts’ consensus estimates by 0.7%.
In light of this news, share prices of the companies have held steady as they are up 1.1% on average since the latest earnings results.
Waste Connections (NYSE:WCN)
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 $2.41 billion, up 7.1% year on year. This print exceeded analysts’ expectations by 0.7%. Overall, it was a strong quarter for the company with a solid beat of analysts’ adjusted operating income and revenue estimates.
"Continued improvement in employee retention and record low safety rates, along with solid waste core pricing growth of 6.6%, drove underlying solid waste margin expansion of approximately 70 basis points in the period," said Ronald J. Mittelstaedt, President and Chief Executive Officer.
Unsurprisingly, the stock is down 7.8% since reporting and currently trades at $170.
Is now the time to buy Waste Connections? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q2: Montrose (NYSE:MEG)
Founded to protect a tree-lined two-lane road, Montrose (NYSE:MEG) provides air quality monitoring, environmental laboratory testing, compliance, and environmental consulting services.
Montrose reported revenues of $234.5 million, up 35.3% year on year, outperforming analysts’ expectations by 24.4%. The business had an incredible quarter with a solid beat of analysts’ organic revenue and EPS estimates.
Montrose achieved the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 29.5% since reporting. It currently trades at $29.29.
Is now the time to buy Montrose? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: Quest Resource (NASDAQ:QRHC)
Recycling corporate waste to help companies be more sustainable, Quest Resource (NASDAQ:QRHC) is a provider of waste and recycling services.
Quest Resource reported revenues of $59.54 million, down 18.6% year on year, falling short of analysts’ expectations by 17.9%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and EBITDA estimates.
Quest Resource delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 29.1% since the results and currently trades at $1.39.
Read our full analysis of Quest Resource’s results here.
Republic Services (NYSE:RSG)
Processing several million tons of recyclables annually, Republic (NYSE:RSG) provides waste management services for residences, companies, and municipalities.
Republic Services reported revenues of $4.24 billion, up 4.6% year on year. This print missed analysts’ expectations by 0.7%. Zooming out, it was a satisfactory quarter as it also produced an impressive beat of analysts’ sales volume estimates but a slight miss of analysts’ revenue estimates.
Republic Services scored the highest full-year guidance raise among its peers. The stock is down 10.2% since reporting and currently trades at $221.03.
Read our full, actionable report on Republic Services here, it’s free for active Edge members.
Waste Management (NYSE:WM)
Headquartered in Houston, Waste Management (NYSE:WM) is a provider of comprehensive waste management services in North America.
Waste Management reported revenues of $6.43 billion, up 19% year on year. This result topped analysts’ expectations by 1.1%. Taking a step back, it was a mixed quarter as it also logged a decent beat of analysts’ EBITDA estimates but a slight miss of analysts’ adjusted operating income estimates.
The stock is down 6.2% since reporting and currently trades at $214.
Read our full, actionable report on Waste Management here, it’s free for active Edge members.
Market Update
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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