With shares of Waste Management (NYSE:WM) trading at around $36.46, is WM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Wall Street is an interesting and entertaining arena. There are hundreds of stories published every day, and many of them will hold your interest. In some cases, you read a story that might excite you, even though you know in the back of your mind that the odds of whatever being reported coming to fruition are slim.
Yesterday, Waste Management’s volume was approximately 13.8 million shares compared to an average volume of approximately 3.2 million shares. Credit Suisse Group stated that investors would benefit if Waste Management was converted to a REIT. Apparently, tax lawyers and accountants deemed that landfills can qualify as REITs. The stock moved up on this news, but not long after, Waste Management stated that the company has no interest in becoming a REIT. The benefit of a REIT is that 90 percent of all taxable income must be distributed to shareholders, but it doesn’t look like there will be any such luck here. Therefore, we must take a look at the basics instead.
Earnings are expected to improve, but margins have decreased. Operating cash flow is respectable at $2.45 billion. Let’s cover some more important numbers for Waste Management…