2012 is nearing its end, and now's a good opportunity to look at what happened throughout the year to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.
Today, I'll look at Waste Management (WM +0.90%). The garbage collection and recycling giant has grown steadily over the years with its innovative way of cashing in on other people's trash. Yet the slowdown in the U.S. economy and weakness among cities and smaller municipalities have put pressure on parts of Waste Management's business. Below, you'll find more on what moved shares of Waste Management this year.
Stats on Waste Management
|
Year-to-Date Stock Return |
8.9% |
|
Market Cap |
$15.8 billion |
|
Revenue, Past 12 Months |
$13.6 billion |
|
Net Income, Past 12 Months |
$859 million |
|
1-Year Revenue Growth |
3.5% |
|
1-Year Net Income Growth |
(12%) |
|
Dividend Yield |
4.2% |
|
CAPS Rating |
***** |
Source: S&P Capital IQ.
What pushed Waste Management higher this year?
Throughout the years, Waste Management has found ways to make money from what others throw away, and 2012 has been no different. Through a wide variety of initiatives, from basic ones like recycling to innovative ones like tapping landfill methane and working with Clean Energy Fuels (CLNE 5.24%) to convert part of its fleet of trucks to natural gas, Waste Management has stayed on top of its industry.
Lately, though, Waste Management has started feeling the heat from its competitors. In stark contrast to Waste Management's decline in net income over the past year, Republic Services (RSG +0.51%) has managed to grow earnings despite a drop in revenue. Waste Management still hasn't recovered from substantial net income drops from 2008 to 2010, relying on its solid balance sheet to finance rising dividends.
Moreover, niche players in the industry are playing an increasingly important role in the industry. Waste Connections (WCN +0.93%) has steered clear of big markets in favor of smaller cities and suburban areas, and it's found a willing market waiting for it. Meanwhile, Stericycle (SRCL +0.00%) specializes in medical waste, which is approaching the height of a demographic trend that could push medical-waste volumes much higher.
With Waste Management's size, it has largely been able to ignore these smaller players. But as 2012's tepid performance shows, Waste Management will eventually have to defend its turf and meet its competitors head-on.
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