Head to Head Analysis: Xylem (NYSE:XYL) versus Waste Management (NYSE:WM)

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

Risk and Volatility

Xylem has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500. Comparatively, Waste Management has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.

Earnings and Valuation

This table compares Xylem 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
Xylem	$8.56 billion	4.08	$890.00 million	$3.85	37.30
Waste Management	$22.06 billion	4.14	$2.75 billion	$6.74	33.67

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

Dividends

Xylem pays an annual dividend of $1.60 per share and has a dividend yield of 1.1%. Waste Management pays an annual dividend of $3.30 per share and has a dividend yield of 1.5%. Xylem pays out 41.6% of its earnings in the form of a dividend. Waste Management pays out 49.0% 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. Xylem has raised its dividend for 2 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.

Insider & Institutional Ownership

88.0% of Xylem shares are owned by institutional investors. Comparatively, 80.4% of Waste Management shares are owned by institutional investors. 0.3% of Xylem shares are owned by insiders. Comparatively, 0.2% of Waste Management shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Xylem	10.74%	10.33%	6.72%
Waste Management	11.36%	34.37%	6.91%

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Xylem	0	3	6	0	2.67
Waste Management	0	8	12	2	2.73

Xylem currently has a consensus target price of $151.5714, indicating a potential upside of 5.54%. Waste Management has a consensus target price of $254.3529, indicating a potential upside of 12.08%. Given Waste Management’s stronger consensus rating and higher probable upside, analysts plainly believe Waste Management is more favorable than Xylem.

Summary

Waste Management beats Xylem on 13 of the 18 factors compared between the two stocks.

About Xylem

Xylem Inc., together with its subsidiaries, engages in the design, manufacture, and servicing of engineered products and solutions worldwide. It operates through four segments: Water Infrastructure, Applied Water, Measurement & Control Solutions, and Integrated Solutions and Services. The Water Infrastructure segment offers products, including water, storm water, and wastewater pumps; controls and systems; filtration, disinfection, and biological treatment equipment; and mobile dewatering equipment and rental services under the ADI, Flygt, Godwin, Sanitaire, Magneto, Neptune Benson, Ionpure, Leopold, Wedeco, and Xylem Vue brands. The Applied Water segment provides pumps, valves, heat exchangers, controls, and dispensing equipment systems under the Goulds Water Technology, Bell & Gossett, A-C Fire Pump, Standard Xchange, Lowara, Jabsco, Xylem Vue, and Flojet brands. The Measurement & Control Solutions segment offers smart meters, networked communication devices, data analytics, test equipment, controls, sensor devices, software and managed services, and critical infrastructure services; and software and services, including cloud-based analytics, remote monitoring and data management, leak detection, condition assessment, asset management, and pressure monitoring solutions, as well as testing equipment. This segment sells its products under the Pure Technologies, Sensus, Smith Blair, WTW, Xylem Vue, and YSI brands. The Integrated Solutions and Services segment provides maintenance services, mobile services, digital outsourced solutions, wastewater systems, environmental remediation, odor and corrosion control, filtration, reverse osmosis, ion exchange, and deionization under Aquapro, WaterOne, and Ion Pure brands. Xylem Inc. was formerly known as ITT WCO, Inc. and changed its name to Xylem Inc. in May 2011. Xylem Inc. was incorporated in 2011 and is headquartered in Washington, District of Columbia.

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.