As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the waste management industry, including Casella Waste Systems (NASDAQ:CWST) 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 mixed Q1. As a group, revenues missed analysts’ consensus estimates by 1%.
In light of this news, share prices of the companies have held steady as they are up 3.9% on average since the latest earnings results.
Casella Waste Systems (NASDAQ:CWST)
Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ:CWST) offers waste management services for businesses, residents, and the government.
Casella Waste Systems reported revenues of $417.1 million, up 22.3% year on year. This print exceeded analysts’ expectations by 3.1%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ EPS estimates but a significant miss of analysts’ adjusted operating income estimates.
“We had a strong first quarter to start the year, with both revenue and Adjusted EBITDA up over 20% year-over-year, as we continue to execute successfully on our operating and growth strategies,” said John W. Casella, Chairman and CEO of Casella Waste Systems,
Casella Waste Systems Total Revenue
Casella Waste Systems scored the fastest revenue growth but had the weakest full-year guidance update of the whole group. The results were likely priced in, however, and the stock is flat since reporting. It currently trades at $117.84.
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 $177.8 million, up 14.5% year on year, outperforming analysts’ expectations by 6%. The business had a stunning quarter with an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EPS estimates.
Montrose Total Revenue
Montrose achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 24.1% since reporting. It currently trades at $18.60.
Perma-Fix reported revenues of $13.92 million, up 2.2% year on year, falling short of analysts’ expectations by 9%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Perma-Fix delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 9.4% since the results and currently trades at $9.68.
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 $2.23 billion, up 7.5% year on year. This result was in line with analysts’ expectations. It was a very strong quarter as it also recorded an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ adjusted operating income estimates.
The stock is down 4.9% since reporting and currently trades at $185.77.
Processing several million tons of recyclables annually, Republic (NYSE:RSG) provides waste management services for residences, companies, and municipalities.
Republic Services reported revenues of $4.01 billion, up 3.8% year on year. This print came in 0.9% below analysts' expectations. Zooming out, it was a mixed quarter as it also produced a solid beat of analysts’ adjusted operating income estimates but sales volume in line with analysts’ estimates.
The stock is flat since reporting and currently trades at $241.
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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