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Waste Management, Inc. (NYSE:WM): Is It A Good Long Term Opportunity?

Simply Wall St

Waste Management, Inc.'s ( NYSE:WM ) most recent earnings update in December 2018 indicated that the company endured a minor headwind with earnings deteriorating from US$1.9b to US$1.9b, a change of -1.2%. Below, I've laid out key growth figures on how market analysts predict Waste Management's earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

See our latest analysis for Waste Management

Market analysts' consensus outlook for this coming year seems pessimistic, with earnings reducing by -4.4%. But in the following year, there is a complete contrast in performance, with generating double digit 2.3% compared to today’s level and continues to increase to US$2.1b in 2022.

NYSE:WM Past and Future Earnings, April 16th 2019

Although it is helpful to understand the rate of growth each year relative to today’s figure, it may be more valuable to analyze the rate at which the business is rising or falling on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Waste Management's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 1.9%. This means, we can presume Waste Management will grow its earnings by 1.9% every year for the next couple of years.

Next Steps:

For Waste Management, I've compiled three key factors you should further research:

  1. Financial Health : Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation : What is WM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether WM is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of WM? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.