Financial Review: Advanced Disposal Services (ADSW) and Vertex Energy (VTNR)

Advanced Disposal Services (NYSE: ADSW) and Vertex Energy (NASDAQ:VTNR) are both business services companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, risk, analyst recommendations, institutional ownership, valuation and earnings.

Insider and Institutional Ownership

96.5% of Advanced Disposal Services shares are owned by institutional investors. Comparatively, 19.1% of Vertex Energy shares are owned by institutional investors. 1.2% of Advanced Disposal Services shares are owned by insiders. Comparatively, 31.0% of Vertex Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Advanced Disposal Services and Vertex Energy’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%
Vertex Energy -7.73% -30.22% -12.58%

Valuation and Earnings

This table compares Advanced Disposal Services and Vertex Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Advanced Disposal Services $1.40 billion 1.48 -$30.40 million ($0.28) -84.10
Vertex Energy $98.08 million 0.30 -$3.95 million ($0.51) -1.76

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

Risk & Volatility

Advanced Disposal Services has a beta of -0.67, suggesting that its stock price is 167% less volatile than the S&P 500. Comparatively, Vertex Energy has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Advanced Disposal Services and Vertex Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Advanced Disposal Services 0 2 6 0 2.75
Vertex Energy 0 1 0 0 2.00

Advanced Disposal Services currently has a consensus price target of $26.00, suggesting a potential upside of 10.40%. Vertex Energy has a consensus price target of $1.00, suggesting a potential upside of 11.11%. Given Vertex Energy’s higher probable upside, analysts clearly believe Vertex Energy is more favorable than Advanced Disposal Services.

Summary

Advanced Disposal Services beats Vertex Energy on 9 of the 13 factors compared between the two stocks.

Advanced Disposal Services Company Profile

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.

Vertex Energy Company Profile

Vertex Energy, Inc. is an environmental services company that recycles industrial waste streams and off-specification commercial chemical products. The Company focuses on recycling used motor oil and other petroleum by-products. The Company’s segments include the Black Oil, Refining and Marketing, and Recovery divisions. The Company’s product categories include Used Motor Oil, Fuel Oil, pyrolysis gasoline (Pygas), Gasoline Blendstock and Base Oil. The Black Oil division is engaged in operations across the used motor oil recycling value chain, including collection, aggregation, transportation, storage, refinement and sales of aggregated feedstock and re-refined products to end users. The Refining and Marketing division is engaged in the aggregation of feedstock, re-refining it into end products, and selling these products to customers. The Recovery division is a provider of generator solutions for the recovery and management of hydrocarbon streams.

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