Head to Head Review: Deluxe (NYSE:DLX) and Waste Management (NYSE:WM)

Waste Management (NYSE:WM) and Deluxe (NYSE:DLX) are both industrials companies, but which is the better business? We will compare the two companies based on the strength of their profitability, earnings, valuation, institutional ownership, dividends, analyst recommendations and risk.

Earnings and Valuation

This table compares Waste Management and Deluxe”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waste Management	$25.67 billion	3.50	$2.71 billion	$7.06	31.83
Deluxe	$2.13 billion	0.52	$82.10 million	$2.25	10.70

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

Dividends

Waste Management pays an annual dividend of $3.78 per share and has a dividend yield of 1.7%. Deluxe pays an annual dividend of $1.20 per share and has a dividend yield of 5.0%. Waste Management pays out 53.5% of its earnings in the form of a dividend. Deluxe pays out 53.3% 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. Waste Management has increased its dividend for 22 consecutive years. Deluxe is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Waste Management	11.11%	31.68%	6.81%
Deluxe	4.91%	23.51%	6.12%

Risk & Volatility

Waste Management has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500. Comparatively, Deluxe has a beta of 1.24, indicating that its stock price is 24% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Waste Management and Deluxe, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waste Management	0	7	13	0	2.65
Deluxe	0	3	0	0	2.00

Waste Management presently has a consensus target price of $258.89, indicating a potential upside of 15.20%. Given Waste Management’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Waste Management is more favorable than Deluxe.

Insider and Institutional Ownership

80.4% of Waste Management shares are owned by institutional investors. Comparatively, 93.9% of Deluxe shares are owned by institutional investors. 0.2% of Waste Management shares are owned by company insiders. Comparatively, 5.4% of Deluxe shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Waste Management beats Deluxe on 12 of the 17 factors compared between the two stocks.

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.

About Deluxe

Deluxe Corporation provides technology-enabled solutions to enterprises, small businesses, and financial institutions in the United States, Canada, and Australia. It operates through Merchant Services, B2B Payments, Data Solutions, and Print segments. The Merchant Services offers credit and debit card authorization and payment systems, as well as processing services primarily to small and medium-sized retail and service businesses. The B2B Payments segment provides treasury management solutions, including remittance and lockbox processing, remote deposit capture, automated receivables management, payment processing, and cash application, as well as automated payables management, such as medical payment and deluxe payment exchange. The Data solutions segment offers data-driven marketing solutions, financial institution profitability reporting, and business incorporation services. The Print segment provides printed personal and business checks, printed business forms, business accessories, and promotional products. It sells through multi-channel sales and marketing, and scalable partnerships. The company was formerly known as Deluxe Check Printers, Incorporated and changed its name to Deluxe Corporation in 1988. Deluxe Corporation was founded in 1915 and is headquartered in Minneapolis, Minnesota.