WASTE MANAGEMENT INC (WM) Stock Fundamental Analysis
NYSE:WM - New York Stock Exchange, Inc. - US94106L1098 - Common Stock - Currency: USD
WM gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 83 industry peers in the Commercial Services & Supplies industry. While WM has a great profitability rating, there are quite some concerns on its financial health. WM is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
WM had positive earnings in the past year.
WM had a positive operating cash flow in the past year.
WM had positive earnings in each of the past 5 years.
In the past 5 years WM always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of WM (6.01%) is better than 69.88% of its industry peers.
With an excellent Return On Equity value of 30.92%, WM belongs to the best of the industry, outperforming 91.57% of the companies in the same industry.
The Return On Invested Capital of WM (8.23%) is better than 66.27% of its industry peers.
The Average Return On Invested Capital over the past 3 years for WM is in line with the industry average of 10.89%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.01% | ||
| ROE | 30.92% | ||
| ROIC | 8.23% |
ROA(3y)6.77%
ROA(5y)6.33%
ROE(3y)33.11%
ROE(5y)28.98%
ROIC(3y)9.52%
ROIC(5y)9.04%
1.3 Margins
With an excellent Profit Margin value of 11.67%, WM belongs to the best of the industry, outperforming 84.34% of the companies in the same industry.
WM's Profit Margin has improved in the last couple of years.
With an excellent Operating Margin value of 18.16%, WM belongs to the best of the industry, outperforming 86.75% of the companies in the same industry.
In the last couple of years the Operating Margin of WM has remained more or less at the same level.
Looking at the Gross Margin, with a value of 39.40%, WM is in the better half of the industry, outperforming 66.27% of the companies in the same industry.
In the last couple of years the Gross Margin of WM has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.16% | ||
| PM (TTM) | 11.67% | ||
| GM | 39.4% |
OM growth 3Y4.47%
OM growth 5Y1.08%
PM growth 3Y7.11%
PM growth 5Y2.87%
GM growth 3Y1.13%
GM growth 5Y-3.63%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so WM is still creating some value.
WM has about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, WM has less shares outstanding
WM has a worse debt/assets ratio than last year.
2.2 Solvency
WM has an Altman-Z score of 2.88. This is not the best score and indicates that WM is in the grey zone with still only limited risk for bankruptcy at the moment.
With a decent Altman-Z score value of 2.88, WM is doing good in the industry, outperforming 60.24% of the companies in the same industry.
The Debt to FCF ratio of WM is 12.98, which is on the high side as it means it would take WM, 12.98 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of WM (12.98) is comparable to the rest of the industry.
A Debt/Equity ratio of 2.65 is on the high side and indicates that WM has dependencies on debt financing.
With a Debt to Equity ratio value of 2.65, WM is not doing good in the industry: 80.72% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.65 | ||
| Debt/FCF | 12.98 | ||
| Altman-Z | 2.88 |
ROIC/WACC1.04
WACC7.88%
2.3 Liquidity
A Current Ratio of 0.83 indicates that WM may have some problems paying its short term obligations.
WM has a worse Current ratio (0.83) than 81.93% of its industry peers.
WM has a Quick Ratio of 0.83. This is a bad value and indicates that WM is not financially healthy enough and could expect problems in meeting its short term obligations.
WM's Quick ratio of 0.79 is on the low side compared to the rest of the industry. WM is outperformed by 81.93% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.83 | ||
| Quick Ratio | 0.79 |
3. Growth
3.1 Past
WM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.84%.
Measured over the past years, WM shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.29% on average per year.
Looking at the last year, WM shows a quite strong growth in Revenue. The Revenue has grown by 10.77% in the last year.
Measured over the past years, WM shows a small growth in Revenue. The Revenue has been growing by 7.38% on average per year.
EPS 1Y (TTM)7.84%
EPS 3Y14.23%
EPS 5Y10.29%
EPS Q2Q%-4.57%
Revenue 1Y (TTM)10.77%
Revenue growth 3Y7.16%
Revenue growth 5Y7.38%
Sales Q2Q%16.65%
3.2 Future
WM is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.11% yearly.
Based on estimates for the next years, WM will show a small growth in Revenue. The Revenue will grow by 7.98% on average per year.
EPS Next Y8.68%
EPS Next 2Y10.45%
EPS Next 3Y10.57%
EPS Next 5Y10.11%
Revenue Next Year16.16%
Revenue Next 2Y10.78%
Revenue Next 3Y8.55%
Revenue Next 5Y7.98%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
WM is valuated quite expensively with a Price/Earnings ratio of 32.74.
Compared to the rest of the industry, the Price/Earnings ratio of WM is on the same level as its industry peers.
WM's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 26.03.
A Price/Forward Earnings ratio of 26.54 indicates a quite expensive valuation of WM.
The rest of the industry has a similar Price/Forward Earnings ratio as WM.
WM is valuated rather expensively when we compare the Price/Forward Earnings ratio to 21.94, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.74 | ||
| Fwd PE | 26.54 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as WM.
WM's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 51.28 | ||
| EV/EBITDA | 17.92 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates WM does not grow enough to justify the current Price/Earnings ratio.
The decent profitability rating of WM may justify a higher PE ratio.
PEG (NY)3.77
PEG (5Y)3.18
EPS Next 2Y10.45%
EPS Next 3Y10.57%
5. Dividend
5.1 Amount
WM has a Yearly Dividend Yield of 1.45%.
WM's Dividend Yield is a higher than the industry average which is at 2.47.
Compared to the average S&P500 Dividend Yield of 2.36, WM is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.45% |
5.2 History
The dividend of WM is nicely growing with an annual growth rate of 7.84%!
WM has been paying a dividend for at least 10 years, so it has a reliable track record.
WM has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)7.84%
Div Incr Years21
Div Non Decr Years25
5.3 Sustainability
46.32% of the earnings are spent on dividend by WM. This is a bit on the high side, but may be sustainable.
The dividend of WM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP46.32%
EPS Next 2Y10.45%
EPS Next 3Y10.57%
234.11
+0.22 (+0.09%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryCommercial Services & Supplies
Earnings (Last)
Earnings (Next)
Inst Owners84.94%
Inst Owner Change-0.31%
Ins Owners0.2%
Ins Owner Change0.98%
Market Cap94.21B
Analysts78.06
Price Target252.45 (7.83%)
Short Float %0.79%
Short Ratio1.74
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.45% |
Yearly Dividend3.01
Dividend Growth(5Y)7.84%
DP46.32%
Div Incr Years21
Div Non Decr Years25
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-3.84%
Min EPS beat(2)-7.87%
Max EPS beat(2)0.19%
EPS beat(4)2
Avg EPS beat(4)-2.5%
Min EPS beat(4)-7.87%
Max EPS beat(4)0.88%
EPS beat(8)4
Avg EPS beat(8)0.79%
EPS beat(12)5
Avg EPS beat(12)-0.43%
EPS beat(16)7
Avg EPS beat(16)-0.28%
Revenue beat(2)0
Avg Revenue beat(2)-2.63%
Min Revenue beat(2)-4.46%
Max Revenue beat(2)-0.81%
Revenue beat(4)0
Avg Revenue beat(4)-2.47%
Min Revenue beat(4)-4.46%
Max Revenue beat(4)-0.81%
Revenue beat(8)0
Avg Revenue beat(8)-3.19%
Revenue beat(12)1
Avg Revenue beat(12)-2.74%
Revenue beat(16)3
Avg Revenue beat(16)-1.92%
PT rev (1m)3.77%
PT rev (3m)5.99%
EPS NQ rev (1m)-0.28%
EPS NQ rev (3m)-0.5%
EPS NY rev (1m)-0.73%
EPS NY rev (3m)-0.59%
Revenue NQ rev (1m)-0.2%
Revenue NQ rev (3m)-0.62%
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)-0.06%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.74 | ||
| Fwd PE | 26.54 | ||
| P/S | 4.11 | ||
| P/FCF | 51.28 | ||
| P/OCF | 18.01 | ||
| P/B | 10.89 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.92 |
EPS(TTM)7.15
EY3.05%
EPS(NY)8.82
Fwd EY3.77%
FCF(TTM)4.57
FCFY1.95%
OCF(TTM)13
OCFY5.55%
SpS56.96
BVpS21.5
TBVpS-22.1
PEG (NY)3.77
PEG (5Y)3.18
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.01% | ||
| ROE | 30.92% | ||
| ROCE | 10.64% | ||
| ROIC | 8.23% | ||
| ROICexc | 8.27% | ||
| ROICexgc | 15.06% | ||
| OM | 18.16% | ||
| PM (TTM) | 11.67% | ||
| GM | 39.4% | ||
| FCFM | 8.01% |
ROA(3y)6.77%
ROA(5y)6.33%
ROE(3y)33.11%
ROE(5y)28.98%
ROIC(3y)9.52%
ROIC(5y)9.04%
ROICexc(3y)9.65%
ROICexc(5y)9.16%
ROICexgc(3y)16.08%
ROICexgc(5y)15.26%
ROCE(3y)12.3%
ROCE(5y)11.69%
ROICexcg growth 3Y1.2%
ROICexcg growth 5Y0.78%
ROICexc growth 3Y-2.68%
ROICexc growth 5Y-3.51%
OM growth 3Y4.47%
OM growth 5Y1.08%
PM growth 3Y7.11%
PM growth 5Y2.87%
GM growth 3Y1.13%
GM growth 5Y-3.63%
F-Score4
Asset Turnover0.52
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.65 | ||
| Debt/FCF | 12.98 | ||
| Debt/EBITDA | 3.48 | ||
| Cap/Depr | 140.89% | ||
| Cap/Sales | 14.81% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 79.6% | ||
| Profit Quality | 68.67% | ||
| Current Ratio | 0.83 | ||
| Quick Ratio | 0.79 | ||
| Altman-Z | 2.88 |
F-Score4
WACC7.88%
ROIC/WACC1.04
Cap/Depr(3y)136.42%
Cap/Depr(5y)120.43%
Cap/Sales(3y)13.98%
Cap/Sales(5y)12.66%
Profit Quality(3y)81.63%
Profit Quality(5y)99.46%
High Growth Momentum
Growth
EPS 1Y (TTM)7.84%
EPS 3Y14.23%
EPS 5Y10.29%
EPS Q2Q%-4.57%
EPS Next Y8.68%
EPS Next 2Y10.45%
EPS Next 3Y10.57%
EPS Next 5Y10.11%
Revenue 1Y (TTM)10.77%
Revenue growth 3Y7.16%
Revenue growth 5Y7.38%
Sales Q2Q%16.65%
Revenue Next Year16.16%
Revenue Next 2Y10.78%
Revenue Next 3Y8.55%
Revenue Next 5Y7.98%
EBIT growth 1Y3.76%
EBIT growth 3Y11.95%
EBIT growth 5Y8.54%
EBIT Next Year74.25%
EBIT Next 3Y26.18%
EBIT Next 5Y17.46%
FCF growth 1Y23.04%
FCF growth 3Y-3.92%
FCF growth 5Y0.98%
OCF growth 1Y21.03%
OCF growth 3Y7.51%
OCF growth 5Y6.83%