The global waste management industry is evolving with the desire for better waste management and technological advancements. So, we think it is the right time to scoop up waste disposal stocks Ecolab Inc. (ECL) and Waste Connections, Inc. (WCN).
According to IMARC Group, the global construction and demolition waste management market will reach $301.10 billion by 2028 at a compound annual growth rate (CAGR) of 4.8%.
The growing need for sustainable construction approaches, rapid urbanization, which leads to increased construction activity, and growing environmental awareness among the general public are some of the key drivers of the market.
Moreover, according to Data Bridge Market Research, the E-waste management market will grow at a 12.8% CAGR until 2030. E-waste is defined as any discarded electrical or electronic equipment, which includes both working and damaged items tossed in the garbage or donated to a charity merchant.
In addition, the global market for smart waste management is anticipated to reach $4.12 billion by 2027.
Ecolab Inc. (ECL)
ECL provides water, hygiene, and infection prevention solutions and services in the United States and internationally. The company operates through Global Industrial, Global Institutional & Specialty, and Global Healthcare & Life Sciences segments.
ECL’s ROCE of 15.10% is 33.5% higher than the 11.31% industry average. Likewise, its trailing-12-month levered FCF margin of 9.26% is 137.1% higher than the industry average of 3.90%.
ECL has paid dividends for 29 consecutive years. Over the last three years, ECL’s dividend payouts have grown at a 3.8% CAGR. While ECL’s four-year average dividend yield is 1.03%, the company’s annual dividend of $2.12 yields 1.26% at the current price level.
For the fiscal first quarter that ended March 31, 2023, ECL’s net sales increased 9.3% year-over-year to $3.57 billion. Its adjusted operating income increased 14.4% year-over-year to $379.30 million. Its adjusted net income came in at $250.50 million, up 5.9% from the previous year, and its EPS increased 7.5% from the year-ago period to $0.88 for the same year.
The consensus revenue estimate of $15.14 billion for the year ending 2023 represents a 6.7% increase year-over-year. Its EPS is expected to grow 10.4% year-over-year to $4.96 in 2023. The stock has gained 18% over the past six months to close its last trading session at $168.78.
It’s no surprise that ECL has an overall B rating, equating to a Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It also has a B grade for Growth, Stability, and Quality. It is ranked nine out of 15 stocks in the A-rated Waste Disposal industry. To access additional ratings for ECL’s Value, Sentiment, and Momentum, click here.
Waste Connections, Inc. (WCN)
Based in Woodbridge, Canada, WCN provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada.
In terms of trailing-12-month WCN’s ROCE of 39.49% is 182.5% higher than the 13.98% industry average. Likewise, its trailing-12-month ROTC of 16.11x is 128.5% higher than the industry average of 7.05x.
WCN has paid dividends for five consecutive years. Over the last five years, WCN’s dividend payouts have grown at a 3.5% CAGR. While WCN’s four-year average dividend yield is 2.15%, the company’s annual dividend of $0.32 yields 1.24% at the current price level.
For the first quarter that ended March 31, 2023, WCN’s revenue increased 15.5% year-over-year to $1.90 billion, while its adjusted EBITDA increased 12.9% from the year-ago value to $566.90 million. Furthermore, the company’s adjusted net income for the year rose 8% from the prior year’s period to $230.40 million, and its adjusted EPS came in at $0.89, an 8.5% year-over-year increase.
Street expects WCN’s revenue to increase 14.2% year-over-year to $2.86 billion in 2023. Its EPS is expected to grow 90.1% year-over-year to $4.28. It has surpassed the EPS estimates in all four trailing quarters. The stock has gained 79.7% over the past year to close the last trading session at $26.06.
WCN’s POWR Ratings reflect its solid prospects. The stock has an overall B rating, translating to Buy in our proprietary rating system.
It also has a B grade for Stability and Quality. It is ranked #7 within the same industry. Click here to see the additional ratings for WCN (Growth, Value, Momentum, and Sentiment).
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ECL shares were trading at $170.22 per share on Tuesday afternoon, up $1.44 (+0.85%). Year-to-date, ECL has gained 17.34%, versus a 7.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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