I guarantee you’ve witnessed — and probably been a part of — this industry in action within the last week, and probably within the last few hours. It’s everywhere, it’s growing, and over the past five years, it’s absolutely destroyed the market’s returns.
We’re making more trash than ever, and the three largest trash haulers and landfill operators in North America, Waste Management (NYSE:WM), Republic Services (NYSE:RSG), and Waste Connections (NYSE:WCN), are reaping the rewards for their investors. Here’s why this niche industry outperformed in 2018 and why it’s unlikely to slow down anytime soon.
A big year for trash
All three of the big waste management companies have now reported their final numbers for 2018, and the results were solid, particularly adjusted earnings per diluted share:
|Company||2018 Revenue||Gain YOY||2018 Adjusted EPS (diluted)||Gain YOY||2018 Operating Cash Flow||Gain YOY|
|Waste Management||$14.9 billion||3%||$4.20||30.4%||$3.6 billion||12.3%|
|Republic Services||$10.0 billion||Flat||$3.09||27%||$2.2 billion||17.4%|
|Waste Connections||$4.9 billion||6.3%||$2.52||16.7%||$1.4 billion||15.9%|
Although revenue for the three companies only showed small improvements — if any — adjusted per-share earnings were up by double digits. Other key metrics like adjusted EBITDA and adjusted free cash flow also showed big improvements over the prior year for all three companies, which are all projecting even better numbers for the next year.
If you’ve noticed that’s a lot of “adjusted” numbers, you’re right. When we look at unadjusted earnings, we see far less year-over-year improvement, if any. Much of that is attributable to changes in the…
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