Critical Comparison: Advanced Disposal Services (ADSW) versus US Ecology (ECOL)

Advanced Disposal Services (NYSE: ADSW) and US Ecology (NASDAQ:ECOL) are both business services companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, dividends, institutional ownership, profitability, valuation, analyst recommendations and risk.

Institutional & Insider Ownership

96.5% of Advanced Disposal Services shares are held by institutional investors. Comparatively, 92.6% of US Ecology shares are held by institutional investors. 1.2% of Advanced Disposal Services shares are held by company insiders. Comparatively, 1.3% of US Ecology shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

US Ecology pays an annual dividend of $0.72 per share and has a dividend yield of 1.4%. Advanced Disposal Services does not pay a dividend. US Ecology pays out 60.0% of its earnings in the form of a dividend.

Risk and Volatility

Advanced Disposal Services has a beta of -0.67, meaning that its share price is 167% less volatile than the S&P 500. Comparatively, US Ecology has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Advanced Disposal Services and US Ecology, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Advanced Disposal Services 0 3 5 0 2.63
US Ecology 1 1 2 0 2.25

Advanced Disposal Services presently has a consensus price target of $25.71, indicating a potential upside of 14.18%. US Ecology has a consensus price target of $51.25, indicating a potential upside of 1.38%. Given Advanced Disposal Services’ stronger consensus rating and higher probable upside, research analysts plainly believe Advanced Disposal Services is more favorable than US Ecology.

Profitability

This table compares Advanced Disposal Services and US Ecology’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Advanced Disposal Services -1.61% 5.84% 1.41%
US Ecology 5.39% 10.35% 3.78%

Earnings and Valuation

This table compares Advanced Disposal Services and US Ecology’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Advanced Disposal Services $1.40 billion 1.42 -$30.40 million ($0.28) -80.43
US Ecology $477.67 million 2.31 $34.25 million $1.20 42.13

US Ecology has lower revenue, but higher earnings than Advanced Disposal Services. Advanced Disposal Services is trading at a lower price-to-earnings ratio than US Ecology, indicating that it is currently the more affordable of the two stocks.

Summary

US Ecology beats Advanced Disposal Services on 9 of the 16 factors compared between the two stocks.

About Advanced Disposal Services

Advanced Disposal Services, Inc. is an integrated provider of non-hazardous solid waste collection, transfer, recycling and disposal services operating primarily in secondary markets or under exclusive arrangements. The Company’s segments include South, East, Midwest and Corporate. As of December 31, 2016, the Company had its presence in 16 states across the Midwest, South and East regions of the United States, as well as in the Commonwealth of the Bahamas, served approximately 2.7 million residential customers and over 200,000 commercial and industrial (C&I) customers through its network of 90 collection operations, 72 transfer stations, 21 owned or operated recycling facilities and 39 owned or operated active landfills. The Company’s vertically integrated environmental services operations can be classified into three lines of business: collection services, disposal services and recycling services. The disposal services include transfer stations and landfills.

About US Ecology

US Ecology, Inc. is a provider of environmental services to commercial and government entities. The Company offers treatment, disposal and recycling of hazardous, non-hazardous and radioactive waste, as well as a range of field and industrial services. The Company operates in two business segments: Environmental Services, and Field & Industrial Services. Its Environmental Services segment provides a range of hazardous material management services, including transportation, recycling, treatment and disposal of hazardous and non-hazardous waste at Company-owned landfill, wastewater and other treatment facilities. The Company’s Field & Industrial Services segment provides packaging and collection of hazardous waste and total waste management solutions at customer sites and through its transfer facilities. Its services include on-site management, waste characterization, transportation and disposal of non-hazardous and hazardous waste.

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