WASTE MANAGEMENT INC (WM) Stock Fundamental Analysis
NYSE:WM - New York Stock Exchange, Inc. - US94106L1098 - Common Stock - Currency: USD
Taking everything into account, WM scores 4 out of 10 in our fundamental rating. WM was compared to 83 industry peers in the Commercial Services & Supplies industry. While WM belongs to the best of the industry regarding profitability, there are concerns on its financial health. WM is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year WM was profitable.
In the past year WM had a positive cash flow from operations.
WM had positive earnings in each of the past 5 years.
Each year in the past 5 years WM had a positive operating cash flow.
1.2 Ratios
WM has a better Return On Assets (6.01%) than 69.88% of its industry peers.
WM has a Return On Equity of 30.92%. This is amongst the best in the industry. WM outperforms 90.36% of its industry peers.
WM's Return On Invested Capital of 8.23% is fine compared to the rest of the industry. WM outperforms 65.06% of its industry peers.
The Average Return On Invested Capital over the past 3 years for WM is below the industry average of 11.67%.
| 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
WM's Profit Margin of 11.67% is amongst the best of the industry. WM outperforms 81.93% of its industry peers.
WM's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 18.16%, WM belongs to the top of the industry, outperforming 86.75% of the companies in the same industry.
WM's Operating Margin has been stable in the last couple of years.
WM's Gross Margin of 39.40% is fine compared to the rest of the industry. WM outperforms 66.27% of its industry peers.
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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), WM is creating some value.
Compared to 1 year ago, WM has about the same amount of shares outstanding.
WM has less shares outstanding than it did 5 years ago.
The debt/assets ratio for WM is higher compared to a year ago.
2.2 Solvency
WM has an Altman-Z score of 2.90. 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.
The Altman-Z score of WM (2.90) is comparable to the rest of the 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.
WM has a Debt/Equity ratio of 2.65. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 2.65, WM is doing worse than 81.93% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.65 | ||
| Debt/FCF | 12.98 | ||
| Altman-Z | 2.9 |
ROIC/WACC0.87
WACC9.47%
2.3 Liquidity
A Current Ratio of 0.83 indicates that WM may have some problems paying its short term obligations.
The Current ratio of WM (0.83) is worse than 81.93% of its industry peers.
A Quick Ratio of 0.79 indicates that WM may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.79, WM is doing worse than 79.52% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.83 | ||
| Quick Ratio | 0.79 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 7.84% over the past year.
WM shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.29% yearly.
Looking at the last year, WM shows a quite strong growth in Revenue. The Revenue has grown by 10.77% in the last year.
WM shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.38% yearly.
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
The Earnings Per Share is expected to grow by 8.88% on average over the next years. This is quite good.
WM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.69% yearly.
EPS Next Y8.68%
EPS Next 2Y10.45%
EPS Next 3Y10.57%
EPS Next 5Y8.88%
Revenue Next Year16.23%
Revenue Next 2Y10.82%
Revenue Next 3Y8.62%
Revenue Next 5Y7.69%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 33.08 indicates a quite expensive valuation of WM.
WM's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of WM to the average of the S&P500 Index (26.32), we can say WM is valued slightly more expensively.
With a Price/Forward Earnings ratio of 26.81, WM can be considered very expensive at the moment.
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 22.13, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 33.08 | ||
| Fwd PE | 26.81 |
4.2 Price Multiples
WM's Enterprise Value to EBITDA ratio is in line with the industry average.
WM's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 51.81 | ||
| EV/EBITDA | 18.08 |
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)3.81
PEG (5Y)3.21
EPS Next 2Y10.45%
EPS Next 3Y10.57%
5. Dividend
5.1 Amount
WM has a Yearly Dividend Yield of 1.39%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 2.56, WM pays a bit more dividend than its industry peers.
With a Dividend Yield of 1.39, WM pays less dividend than the S&P500 average, which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.39% |
5.2 History
On average, the dividend of WM grows each year by 7.84%, which is quite nice.
WM has paid a dividend for at least 10 years, which is 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 around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP46.32%
EPS Next 2Y10.45%
EPS Next 3Y10.57%
236.5
-0.65 (-0.27%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryCommercial Services & Supplies
Earnings (Last)
Earnings (Next)
Inst Owners83.91%
Inst Owner Change-0.08%
Ins Owners0.2%
Ins Owner Change2.76%
Market Cap95.17B
Analysts78.13
Price Target253.87 (7.34%)
Short Float %0.79%
Short Ratio1.69
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.39% |
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)0.56%
PT rev (3m)4.2%
EPS NQ rev (1m)-0.03%
EPS NQ rev (3m)-0.37%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.5%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.45%
Revenue NY rev (1m)0.06%
Revenue NY rev (3m)-0.42%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 33.08 | ||
| Fwd PE | 26.81 | ||
| P/S | 4.15 | ||
| P/FCF | 51.81 | ||
| P/OCF | 18.19 | ||
| P/B | 11 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.08 |
EPS(TTM)7.15
EY3.02%
EPS(NY)8.82
Fwd EY3.73%
FCF(TTM)4.57
FCFY1.93%
OCF(TTM)13
OCFY5.5%
SpS56.96
BVpS21.5
TBVpS-22.1
PEG (NY)3.81
PEG (5Y)3.21
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 | 2.9 |
F-Score4
WACC9.47%
ROIC/WACC0.87
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 5Y8.88%
Revenue 1Y (TTM)10.77%
Revenue growth 3Y7.16%
Revenue growth 5Y7.38%
Sales Q2Q%16.65%
Revenue Next Year16.23%
Revenue Next 2Y10.82%
Revenue Next 3Y8.62%
Revenue Next 5Y7.69%
EBIT growth 1Y3.76%
EBIT growth 3Y11.95%
EBIT growth 5Y8.54%
EBIT Next Year74.5%
EBIT Next 3Y25.82%
EBIT Next 5Y17.33%
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%