COMPANY DESCRIPTION
Waste Management is a holding company. Through its subsidiaries, Co. is engaged in providing waste management services in North America, including collection, transfer, recycling and resource recovery, and disposal services for residential, commercial, industrial and municipal customers. Co. is also a developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the U.S. Co. also provides other services, including recycling brokerage services, in-plant services, and disposal services for oilfield drilling and operations, among others. At Dec 31 2013, Co. owned or operated 262 solid waste landfills, and also operated five hazardous waste landfills in the U.S.
ECONOMIC MOAT
WM’s moat is evidenced by its industry-leading landfill network, which provides a competitive advantage that is difficult for other waste services providers to replicate. Republic Services (RSG) the next largest competitor has 80 fewer landfills. Landfill ownership is highly regulated and barriers to entry are very high. Being the largest player gives WM pricing power.
OUTLOOK
WM has posted solid results lately. It was able to command a 3.9% price increase. WM has also been cutting costs. WM reduced around 700 jobs through the consolidation of operating areas. Moreover, one layer of management has been removed. Cash assets were $1.3 billion and, starting in mid-2015, WM intends to use much of these funds for acquisitions and share repurchases. WM’s stock has an above-average dividend yield.
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STRENGTHS
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Strong asset infrastructure
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Strong landfill network
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Strong portfolio of waste-to-energy facilities
WEAKNESSES
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Geographic concentration
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High long term debt
THREATS
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Environmental laws and regulations
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Non availability of landfill waste
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Technological risk
OPPORTUNITIES
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Strategic acquisitions and joint ventures
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New developments
The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.
The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.
