The Cleanaway Waste Management Ltd (ASX: CWY) share price has been on an absolute tear this year, with CWY shares up from the $1.61 levels that the New Year brought in, to today's price of $2.44 (a rise of over 50% in just 6 months). So what has prompted such a dramatic move? And more importantly, is Cleanaway Waste a buy today?
What does Cleanaway Waste Management do?
Cleanaway Waste Management is in (as you hopefully guessed) the business of waste processing and management and is the largest company of its kind in Australia, with more than 5,500 employees and a market capitalisation of $4.97 billion. The company's largest operations involve general waste and recycling but Cleanaway also manages waste water, landfills, hazardous waste and medical waste, among other services.
Cleanaway also currently services over 88 local government areas, so it's very possible that Cleanaway are your 'local garbos' (you might want to check next bin day).
Is Cleanaway a buy today?
Cleanaway states that "seeing waste as a resource allows our business to continue growing – returning commodities to the value chain… we're always finding better, smarter and cleaner ways to make a sustainable future possible", which (in my opinion) is a fantastic ethos for a company and indicates a strong future for the company. Waste management as an issue is not going to go away anytime soon (especially with our growing population) and by placing itself in the centre of the solution rather than the problem, Cleanaway is ensuring a role in an increasingly profitable business.
Speaking of profits, Cleanaway's latest update (for the six months ending 2018) were what former Prime Minister Paul Keating would call a "beautiful set of numbers". Net revenue was up 47.4% year-on-year, as well as underlying earnings up by 44%. The company also increased its dividend by 50% (from 1.1 to 1.65 cents per share).
There is little doubt that Cleanaway's 2019 share performance has been heavily influenced by these results, as well as the company's defensive earnings base. Safe dividend-payers are in high demand at current times and Cleanaway may prove to be a formidable dividend growth stock going forward.
Foolish Takeaway
Although I will be watching the next set of numbers very closely, there is definitely a lot to like about Cleanaway Waste Management. Although the current share price is looking very expensive (with a price-to-earnings ratio of 43.6), it may be worth it if the company can sustain its 'beautiful' growth numbers.
