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About the Industry
Companies in the Zacks Waste Removal Services industry play a vital role in the collection, treatment and responsible management of diverse waste types, aiming to minimize their impacts on the environment and public health. This market is categorized into distinct segments based on the kind of waste, including industrial, commercial, domestic and agricultural. The Industrial waste segment has gained significance due to the ongoing industrial expansion, creating a substantial demand for efficient waste management solutions. The market encompasses Collection and Disposal services. The Disposal services segment, primarily fueled by the growing need for waste recycling to mitigate environmental impacts, stands as the primary revenue-generating category.
What's Shaping the Future of the Business Services Industry?
Environmental, Social and Governance (“ESG”) Goals: Waste management is a cornerstone of ESG principles, as it helps companies improve their ESG ratings by promoting environmental sustainability, fostering social well-being and upholding good governance. Per Grand View Research, the average ESG disclosure score for the waste management industry lies at 50-60%. Embracing responsible waste management meets legal requirements and aligns with consumer and investor desires for sustainable and ethical business practices. At present, waste management is not only a duty but also a chance for businesses to showcase their dedication to ESG values, which underpin lasting success and resilience.
Tech-Driven Waste Management Industry Growth: Technology has become a vital component in waste management, mitigating the challenges of waste generation and environmental impacts. This transformative correlation promises a more sustainable future. For instance, AI is emerging as a crucial tool to sort waste and keep recyclable materials from going into landfills. Advancing technology results in more effective, eco-friendly waste management, lowering the ecological footprint and promoting sustainability. Waste challenges can be mitigated using technology that leads us toward responsible waste management and a cleaner planet.
Waste-to-Energy (“WTE”)Innovation: WTE comprises thermal (pyrolysis, incineration and gasification) and biological solutions (composting and anaerobic digestion), a cornerstone in sustainable waste management. This technology transforms waste into energy via methods like incineration or gasification. Per a report by Precedence Research, the Waste-to-Energy Market size is anticipated to be $48.1 billion in 2024 and reach $93 billion by 2034, seeing a CAGR of 6.8%. The rise is expected to be fuelled by an increasing amount of waste generation, growing waste management concerns to meet sustainable living standards, and increased focus on non-fossil fuels. The industry holds a vital position in the era of clean energy, offering a renewable energy source and addressing the hindrances around waste management.
High Operating Costs Deteriorate Bottom Line: Waste management is a complex and time-consuming process demanding higher capital and operating costs to manage waste collection vehicles, bins and processing equipment, along with a huge number of workers. High operational expenses are expected to keep the bottom line of the companies in this industrial cohort under pressure.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Zacks Waste Removal Services industry, which is housed within the Zacks Business Services sector, currently carries a Zacks Industry Rank #189. This rank places it in the bottom 23% of 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates a continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock market performance and current valuation.
Industry Lags Sector & S&P 500
The Zacks Waste Removal Services industry has outperformed the broader sector and the S&P 500 over the past year.
The industry has risen 5.3% compared with 9.3% growth of the broader sector and the Zacks S&P 500 composite’s 16.6% rally.
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Industry's Current Valuation
Based on EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing Waste Removal services stocks because of their high debt levels, the industry is currently trading at 13.68X compared with the S&P 500’s 17.77X and the sector’s 11.44X.
Over the past five years, the industry has traded as high as 13.98X and as low as 12.48X, the median being 13.56X, as the charts below show.
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3 Waste Removal Services Stocks to Keep a Close Eye on
Below, we have presented three stocks that are expected to grow in the near term.
Montrose Environmental Group: This comprehensive environmental consulting provider is banking on strong internal execution and optimistic market conditions. In the second quarter of 2025, the top line improved 35.3% year over year, with operating leverage expanding robustly, evidenced by a 69.8% surge in adjusted EBITDA. This kind of enhanced profitability sheds light on MEG’s prudent expense management.
A vital component of revenue growth was a singular environmental emergency response for a major client, contributing $35 million in incremental revenues. Beyond this, the company's growth is fueled by organic growth initiatives focused on strengthening existing client relationships rather than customer wins. This improvement is supported by robust organic growth across all three business segments.
The management expects rising industrial activity in the private sector and a focus on environmental compliance to become major tailwinds for the company’s growth. This led management to have an optimistic outlook for 2025.
MEG sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for the company’s 2025 earnings has skyrocketed 123.8% in the past 60 days. MEGshares have swelled 62% in the year-to-date period.
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Zurn Elkay: This company designs, procures, manufactures, and markets water management solutions. In the second quarter of 2025, the top line improved 7.9% year over year, and the adjusted EBITDA margin expanded 120 basis points, hinting at strategic and operational strengths. Volume leverage, productivity initiatives and continuous improvement fueled margin expansion.
Having navigated through a dynamic global tariff scenario, CEO Todd Adams assured Zurn Elkay’s commitment to remaining price positive, both in the short and long run. Supply-chain strategy targeted at lowering reliance on China, with an aim of less than 2-3% of cost of goods sold by the end of 2026, bolsters the CEO’s confidence, thus improving the same for investors.
Zurn Elkay launched the Elkay Pro Filtration system, which is a prominent long-term growth driver. This product improved aesthetics, filter life span, and easy 30-second filter change. This product, combined with ZWS’s strong execution on growth initiatives, positions the company for sustained performance, justifying a full-year outlook hike.
ZWS flaunts a Zacks Rank #1 at present. The Zacks Consensus Estimate for its 2025 bottom line has increased 6.7% in the past 60 days. ZWS shares have risen 24.8% in the year-to-date period.
Pentair: This water solutions provider’s top line grew 2% year over year in the June quarter, with the bottom line increasing 14%. Transformation initiatives, pricing power and strategic buyouts fueled this strong performance. Since the beginning of 2023, PNR has delivered more than $200 million in transformation, with an additional $20 million in the second quarter itself.
Although sales growth was decent, the Pool segment witnessed a standout rise of 9% due to price, volume and the Gulfstream buyout. The company’s ability to maintain a strong balance sheet and a strong free cash flow position has enabled it to deploy capital via share repurchases and buyouts, accelerating the bottom line. Management is bullish on the company’s ability to navigate through the economic challenges by leveraging operational efficiency and a balanced portfolio, thus raising the full-year outlook.
PNR carries a Zacks Rank #2 (Buy) at present. The Zacks Consensus Estimate for its 2025 bottom line has increased 1.9% over the past 60 days. PNRshares have risen 8.6% in the year-to-date period.
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This article originally published on Zacks Investment Research (zacks.com).
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