Waste Management's Q3 Net Down, Misses; Lowers FY Outlook

Waste Management reported a 7.3% decline in third-quarter net income to $278 million, or $0.54/share, missing analysts' average estimate of $0.59/share. Revenues were also down, by 1.2% to $3.4B, compared to analyst estimates of $3.41B. Waste Management lowered its full-year EPS forecast by $0.04, to $2.03 to $2.07, since it no longer expects to receive a tax credit by that amount versus when it issued guidance in July. On a more positive note, the company said it generated $771M in cash from operations during the quarter ($550M in free cash flow) and now expects full-year FCF to be approximately $1.5B, or around $100M higher than the high-end of its previous estimate. In a statement, CEO David P. Steiner commented, "Our collection and recycling businesses continue to grow income from operations at double digit rates, and we will continue to follow our strategy of pricing work to generate acceptable margins and returns on our business." (Full transcript later). Waste Management said it repurchased $499M of its common stock during Q3. Shares of Waste Management gained 0.7% to $39.03 on Thursday, but were last trading lower by 2.7% to $37.99 in thin pre-market activity.

Sources: Press release, MarketWatch Commentary: A Look At Industrial Stocks By Relative P/E and PEG • Show Me the Money: The Importance of Monitoring Accrual Levels and Trends • Waste Management: Clean Up Some Profits Stocks to watch: WMI. Competitors: RSG, AW. ETFs: EVX

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