Cleanaway Waste Management Limited (ASX: CWY) shares have fallen as much as 14% this morning after the company released its FY19 results. Here’s what you need to know.

About Cleanaway

Cleanaway Waste Management is Australia’s leading total waste management, industrial and environmental services company with more than 6,000 staff working across more than 260 locations. Cleanaway is in the S&P/ASX 200 (INDEXASX: XJO) with a market capitalisation of more than $4.8 billion.

Here Are The Five Key Points

  • Net revenue increased 34.8% to $2,109.1 million
  • Underlying earnings before interest and tax (EBIT) was up 44.7% to $240.8 million
  • Underlying net profit after tax (NPAT) was up 43.1% to $140 million
  • Final dividend increased by 35.7% to $1.90 per share
  • Free cash flow increased by 76.4% to $206.4 million

Analyst Estimates

Despite the high growth Cleanaway experienced during FY19, results fell short of analyst expectations.

According to Reuters, the average analyst estimate for sales was $2,327 million, compared to the actual result of $2,109.1 million.

Cleanaway also fell short on earnings per share (EPS), with an underlying EPS of 6.9 cents per share and a statutory EPS of 6 cents per share versus analyst estimates of 7.04 cents per share.

Management Commentary

CEO and Managing Director Vik Bansal said the results have been driven by organic growth.

“I am pleased to report results that once again reflect strong growth by Cleanaway across all our operating segments,” he said.

“These results have been driven by the organic growth we have achieved in revenue, earnings and margins, in addition to the synergies achieved so far from the acquisition of Toxfree.”

“Margins have expanded and the integration of the Toxfree business is progressing as planned and we remain confident of delivering the $35 million of annual synergies from the acquisition.”

Why Are Cleanaway Shares Falling?

Despite high growth and seemingly impressive results, it seems investors were expecting more. Cleanaway shares are up 45% year-to-date and trade on a trailing price-earnings (PE) ratio of more than 40 times.

Besides the high valuation, Cleanaway did hint that FY20 results might not be so impressive, saying that policy changes in China and the general outlook for the Australian economy could result in increased costs and variability in pricing.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.