Why Casella Waste Systems Stock Flopped on Friday

Key Points

• The company's bottom-line miss in its second quarter was striking.

• That was compounded by a guidance reduction for full-year profitability.

• 10 stocks we like better than Casella Waste Systems ›

Solid waste and recycling management company Casella Waste Systems (NASDAQ: CWST) was surely eager to start its weekend. On Friday, the company published quarterly results that were a dud with investors, who sent its share price down by more than 5%. That was more deeply in the red than the S&P 500 index's 1.6% dive.

One big whiff

Much of this was because of a fairly wide bottom-line miss in Casella's second quarter, the results of which were published after market close Thursday.

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In the quarter, Casella booked revenue of over $465 million. So far, so good, as this was more than 23% higher than in the same quarter of 2024. Further down the profit and loss statement, however, the company revealed that its generally accepted accounting principles (GAAP) net income fell to $5.2 million ($0.08 per share) from the year-ago profit of slightly over $7 million.

That drop was discouraging enough, but it was exacerbated by the fact that analysts were expecting far better from the company. On average, they were modeling $0.33 per share for bottom-line profitability, although they underestimated revenue with a collective $454 million projection.

Acquisitions played a role in Casella's top-line growth, as the company completed six buyouts across the first half of this year. Management also said higher landfill volumes were a catalyst.

Notable guidance revisions

Outside of the bottom-line miss, Casella's change in guidance was dismaying for investors. Although it raised its outlook for full-year 2025 revenue -- $1.82 billion to $1.84 billion from just under $1.78 billion to a bit over $1.8 billion -- it cut that for profitability. The company now believes its GAAP net income will land at $8 million to $18 million; the previous guidance called for $10 million to $25 million.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.