Finding Value in Waste Management Stocks: MEG vs. WM Analysis

When evaluating waste management stocks for value investing opportunities, two names consistently emerge in discussions: Montrose Environmental Group (MEG) and Waste Management, Inc. (WM). Both operate in the same sector, yet their valuations and growth outlooks differ considerably. Understanding which company represents the better opportunity requires examining multiple dimensions of value beyond surface-level metrics.

Understanding the Investment Evaluation Framework

The approach to identifying value opportunities typically combines two key elements: ranking systems that emphasize earnings trajectory and scoring methodologies that identify stocks with specific characteristics. The Zacks Rank system, for instance, focuses on earnings estimates and how analysts have recently revised their forecasts. Meanwhile, Style Scores work to pinpoint equities displaying particular traits aligned with value investing principles.

These frameworks reveal important distinctions between the two waste management stocks. MEG carries a Zacks Rank of #2 (Buy), suggesting that analyst sentiment regarding its earnings has been strengthening. WM, by contrast, holds a Zacks Rank of #3 (Hold), indicating a more neutral outlook. This divergence in ranking reflects the different trajectories these companies are experiencing in terms of analyst confidence and earnings estimate revisions. For investors seeking growth catalysts, MEG’s improving analyst outlook presents a more compelling narrative.

Valuation Metrics Comparison

Beyond ranking systems, traditional valuation metrics provide crucial insights. The forward price-to-earnings ratio (P/E) serves as a fundamental starting point. MEG trades at a forward P/E of 17.40, while WM commands a notably higher forward P/E of 26.28. This spread suggests that MEG’s earnings are being valued at a more modest level relative to expected profits.

The PEG ratio adds another dimension by incorporating expected earnings growth rates into the valuation calculation. MEG demonstrates a PEG ratio of 0.91—a particularly attractive figure suggesting the stock is undervalued relative to its growth prospects. WM’s PEG ratio of 2.44 indicates a more expensive valuation when growth is factored in. Similarly, the price-to-book (P/B) ratio, which compares market value to asset value, reveals MEG at 1.98 versus WM at 9.22—another significant gap favoring MEG.

Collectively, these metrics have contributed to MEG receiving a Value Style Score of B, while WM received a C grade. The fundamental analysis suggests that waste management stocks in the MEG category offer superior value positioning.

Which Waste Management Stock Offers Better Value?

Based on comprehensive analysis across both ranking systems and valuation metrics, MEG emerges as the more attractive option for value-focused investors. The company’s improving analyst outlook, coupled with its more favorable P/E, PEG, and P/B ratios, positions it as the superior choice among these two waste management stocks. While WM remains a stable, established player in the sector, its higher valuation multiples suggest it has already captured significant investor enthusiasm.

For those constructing a value-oriented portfolio within the waste management industry, the data points toward MEG as the more compelling opportunity at this valuation stage.