Veralto and Waste Management: A Comprehensive Financial Comparison

Waste Management (NYSE: WM) and Veralto (NYSE: VLTO) are prominent players in the business services sector, yet they operate in distinct markets. This article provides a detailed comparison of the two companies, focusing on their financial metrics, dividends, profitability, and institutional ownership to determine which might be the more attractive investment.

Dividend Performance and Payout Ratios

Waste Management boasts an annual dividend of $3.30 per share, offering a dividend yield of 1.4%. In contrast, Veralto pays an annual dividend of $0.52 per share, with a yield of 0.5%. Waste Management distributes 52.0% of its earnings as dividends, while Veralto allocates 14.2%. Both companies maintain healthy payout ratios, suggesting they can sustain these payments in the coming years.

Notably, Waste Management has increased its dividend for 22 consecutive years, showcasing a robust history of dividend growth. Veralto, having raised its dividend only once since its inception in 2022, still has much to prove in this regard. Given these factors, Waste Management emerges as the stronger choice for dividend-seeking investors.

Profitability and Valuation Insights

When examining profitability metrics, Waste Management outperforms Veralto in terms of net margins, return on equity, and return on assets. This suggests that Waste Management not only generates higher revenues but also utilizes its assets more effectively to generate profit.

In terms of valuation, Waste Management presents higher revenue figures than Veralto. However, Veralto trades at a lower price-to-earnings (P/E) ratio, indicating that it might be the more affordable stock at present. This divergence suggests that while Waste Management has established financial strength, Veralto may offer potential value for investors looking for growth opportunities.

Analyst Ratings and Institutional Ownership

Recent analyst ratings, as compiled by MarketBeat.com, reveal a consensus target price of $251.19 for Waste Management, indicating a potential upside of 9.58%. Conversely, Veralto has a consensus target price of $112.89, suggesting a greater potential upside of 11.43%. This higher upside in Veralto’s target price may lead analysts to favor it over Waste Management, despite Waste Management’s stronger historical performance.

Institutional ownership reflects confidence in both companies. Approximately 80.4% of Waste Management shares are held by institutional investors, compared to 91.3% for Veralto. Insider ownership is minimal in both firms, with 0.2% of Waste Management shares and 0.4% of Veralto shares owned by company insiders. High institutional ownership can indicate a belief that a stock will outperform the market over the long term.

Company Profiles

**Waste Management, Inc.**, headquartered in Houston, Texas, provides environmental solutions across residential, commercial, industrial, and municipal sectors in the United States and Canada. The company offers a range of services, including waste collection, landfill operations, and materials recycling. As of December 31, 2022, it operated 254 solid waste landfills, five secure hazardous waste landfills, 97 material recovery facilities, and 337 transfer stations.

**Veralto Corporation**, based in Waltham, Massachusetts, specializes in water analytics, treatment, and quality solutions. Its operations are divided into two segments: Water Quality (WQ) and Product Quality & Innovation (PQI). The WQ segment provides technologies for measuring and treating water, while the PQI segment offers marking and coding solutions for products and packaging. Despite being a newer entity, having been incorporated in 2022, Veralto is positioned in growing markets with significant potential for future expansion.

In conclusion, while both Waste Management and Veralto have their strengths, the choice between them depends on investor priorities. Waste Management stands out with its robust dividend history and profitability, while Veralto may appeal to those seeking growth in innovative sectors. Each company presents unique opportunities in the business services landscape, reflecting the diverse needs of investors.