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What happened

Shares of North American garbage-collection and recycling leader Waste Management (NYSE:WM) returned 19.9% in the first half of 2021 (January through June), according to data from S&P Global Market Intelligence. Catalysts include the company turning in better-than-expected quarterly results and increasing its full-year outlook. 

For context, the S&P 500 index returned 15.3% in the first half of the year.

Year to date (July 14) in 2021, Waste Management stock has returned 23.2%, nearly six percentage points better than the broader market’s return over this period.

Image source: Getty Images.

So what

Waste Management stock has surpassed Wall Street earnings estimates in at least the last four consecutive quarters, perhaps longer. This fact is likely a reason for the industrial stock‘s continued solid performance.

The company’s business enjoys relatively steady demand no matter the economic environment and its stock pays a dividend, currently yielding about 1.6%. These features make the stock attractive to conservative investors.

In the first quarter, Waste Management’s revenue increased 10% year over year to $4.11 billion, driven by contributions from acquisitions, primarily Advanced Disposal. Excluding the impact of both acquisitions and divestitures over the last year, revenue edged up about 2% year over year.

This was actually a solid revenue performance given that volumes handled remained lower — though just slightly — than the year-ago period due to the pandemic.

Adjusted for one-time items, earnings per share (EPS) jumped 14% to $1.06, beating the analyst consensus estimate of $1.01. 

Now what

Last quarter, management raised its full-year 2021 guidance due in part to the integration of Advanced Disposal proceeding better than it had expected. It now anticipates 2021 revenue growth of 12.5% to 13% year over year, up from its prior guidance of 10.8% to 11.3%. It also projects 2021 free cash flow of $2.33 billion to $2.43 billion, up from $2.25 billion to $2.35 billion.

Investors can expect material news soon. Waste Management plans to release its second-quarter results before the market opens on Tuesday, July 27. An analyst conference call is scheduled to follow on that day at 10 a.m. EDT.

For Q2, Wall Street is modeling for revenue to rise 19% year over year to $4.23 billion and adjusted EPS to surge 34% to $1.18.

Waste Management stock is unlikely to be a huge outperformer in any given year. But it’s a stock that usually beats the market — on a total-return basis — by a little over most shorter periods. Over time, this can add up, thanks to the power of reinvesting dividends. Over the last 10 years, for instance, the stock has returned 428%, while the S&P 500 has returned 310%.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.