Critical Analysis: Veralto (NYSE:VLTO) and Waste Management (NYSE:WM)

Veralto (NYSE:VLTO) and Waste Management (NYSE:WM) are both large-cap business services companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, analyst recommendations and earnings.

Institutional and Insider Ownership

91.3% of Veralto shares are held by institutional investors. Comparatively, 80.4% of Waste Management shares are held by institutional investors. 0.4% of Veralto shares are held by insiders. Comparatively, 0.2% of Waste Management shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Veralto and Waste Management”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Veralto	$5.45 billion	4.67	$833.00 million	$3.65	28.12
Waste Management	$22.06 billion	4.04	$2.75 billion	$6.35	34.84

Waste Management has higher revenue and earnings than Veralto. Veralto is trading at a lower price-to-earnings ratio than Waste Management, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings for Veralto and Waste Management, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Veralto	0	7	5	0	2.42
Waste Management	0	9	18	3	2.80

Veralto currently has a consensus target price of $112.89, suggesting a potential upside of 10.00%. Waste Management has a consensus target price of $250.45, suggesting a potential upside of 13.22%. Given Waste Management’s stronger consensus rating and higher probable upside, analysts clearly believe Waste Management is more favorable than Veralto.

Risk & Volatility

Veralto has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, Waste Management has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500.

Dividends

Veralto pays an annual dividend of $0.52 per share and has a dividend yield of 0.5%. Waste Management pays an annual dividend of $3.30 per share and has a dividend yield of 1.5%. Veralto pays out 14.2% of its earnings in the form of a dividend. Waste Management pays out 52.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Veralto has raised its dividend for 1 consecutive years and Waste Management has raised its dividend for 22 consecutive years. Waste Management is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Veralto and Waste Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Veralto	16.75%	38.69%	13.80%
Waste Management	10.35%	33.00%	6.52%

Summary

Waste Management beats Veralto on 10 of the 18 factors compared between the two stocks.

About Veralto

Veralto Corporation provides water analytics, water treatment, marking and coding, and packaging and color services worldwide. It operates through two segments, Water Quality (WQ) and Product Quality & Innovation (PQI). The WQ segment offers precision instrumentation and water treatment technologies to measure, analyze, and treat water in residential, commercial, municipal, industrial, research, and natural resource applications through the Hach, Trojan Technologies, and ChemTreat brands. This segment provides water solutions, including chemical reagents, services, and digital solutions. The PQI segment offers inline printing solutions for products and packaging with marking and coding systems; marking and coding for packaged goods and related consumables; design software and imaging systems for the creation of new packaging designs; color management solutions for printed packages and consumer and industrial products; color standard services for the design industry; and a software solution that provides digital asset management, marketing resource management, and product information management. This segment sells its products and services through the Videojet, Linx, Esko, X-Rite, and Pantone brands to regulated industries, including municipal utilities, food and beverage, pharmaceutical, and industrials. The company was formerly known as DH EAS Holding Corp. and changed its name to Veralto Corporation in February 2023. Veralto Corporation was incorporated in 2022 and is headquartered in Waltham, Massachusetts.

About Waste Management

Waste Management, Inc., through its subsidiaries, engages in the provision of environmental solutions to residential, commercial, industrial, and municipal customers in the United States and Canada. It offers collection services, including picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility (MRF), or disposal site; and owns and operates transfer stations, as well as owns, develops, and operates landfill facilities that produce landfill gas used as renewable natural gas for generating electricity. As of December 31, 2022, the company owned or operated 254 solid waste landfills, five secure hazardous waste landfills, 97 MRFs, and 337 transfer stations. It also provides materials processing and commodities recycling services at its MRFs, where cardboard, paper, glass, metals, plastics, construction and demolition materials, and other recycling commodities are recovered for resale or redirected for other purposes; recycling brokerage services, such as managing the marketing of recyclable materials for third parties; and other strategic business solutions. In addition, the company offers construction and remediation services; services related with the disposal of fly ash, and residue generated from the combustion of coal and other fuel stocks; in-plant services comprising full-service waste management solutions and consulting services; and specialized disposal services for oil and gas exploration and production operations. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was incorporated in 1987 and is headquartered in Houston, Texas.