WASTE MANAGEMENT INC (WM) Stock Fundamental Analysis
NYSE:WM - New York Stock Exchange, Inc. - US94106L1098 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to WM. WM was compared to 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. While showing a medium growth rate, WM is valued expensive at the moment. WM also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
WM had positive earnings in the past year.
In the past year WM had a positive cash flow from operations.
Each year in the past 5 years WM has been profitable.
Each year in the past 5 years WM had a positive operating cash flow.
1.2 Ratios
WM has a Return On Assets of 6.16%. This is in the better half of the industry: WM outperforms 69.88% of its industry peers.
WM has a better Return On Equity (33.28%) than 92.77% of its industry peers.
The Return On Invested Capital of WM (8.38%) is better than 67.47% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for WM is in line with the industry average of 10.60%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.16% | ||
| ROE | 33.28% | ||
| ROIC | 8.38% |
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
Looking at the Profit Margin, with a value of 12.45%, WM belongs to the top of the industry, outperforming 85.54% of the companies in the same industry.
In the last couple of years the Profit Margin of WM has grown nicely.
With an excellent Operating Margin value of 18.81%, WM belongs to the best of the industry, outperforming 87.95% 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.
With a decent Gross Margin value of 39.34%, WM is doing good in 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 | 18.81% | ||
| PM (TTM) | 12.45% | ||
| GM | 39.34% |
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
WM has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
The number of shares outstanding for WM remains at a similar level compared to 1 year ago.
The number of shares outstanding for WM has been reduced compared to 5 years ago.
Compared to 1 year ago, WM has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 2.78 indicates that WM is not a great score, but indicates only limited risk for bankruptcy at the moment.
WM has a Altman-Z score (2.78) which is comparable to the rest of the industry.
The Debt to FCF ratio of WM is 11.07, which is on the high side as it means it would take WM, 11.07 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 11.07, WM is in line with its industry, outperforming 51.81% of the companies in the same industry.
WM has a Debt/Equity ratio of 2.73. This is a high value indicating a heavy dependency on external financing.
WM has a worse Debt to Equity ratio (2.73) than 81.93% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.73 | ||
| Debt/FCF | 11.07 | ||
| Altman-Z | 2.78 |
ROIC/WACC1.1
WACC7.63%
2.3 Liquidity
WM has a Current Ratio of 0.76. 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 has a worse Current ratio (0.76) than 85.54% of its industry peers.
A Quick Ratio of 0.73 indicates that WM may have some problems paying its short term obligations.
WM's Quick ratio of 0.73 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 | 0.76 | ||
| Quick Ratio | 0.73 |
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.
WM shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 8.01%.
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)8.01%
Revenue growth 3Y7.16%
Revenue growth 5Y7.38%
Sales Q2Q%16.65%
3.2 Future
Based on estimates for the next years, WM will show a quite strong growth in Earnings Per Share. The EPS will grow by 10.11% on average per year.
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 Y9.48%
EPS Next 2Y11.37%
EPS Next 3Y10.68%
EPS Next 5Y10.11%
Revenue Next Year16.02%
Revenue Next 2Y10.64%
Revenue Next 3Y8.59%
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
Based on the Price/Earnings ratio of 32.64, the valuation of WM can be described as expensive.
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 (28.88), we can say WM is valued inline with the index average.
The Price/Forward Earnings ratio is 26.02, which means the current valuation is very expensive for WM.
Based on the Price/Forward Earnings ratio, WM is valued a bit cheaper than 63.86% of the companies in the same industry.
WM's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 21.20.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.64 | ||
| Fwd PE | 26.02 |
4.2 Price Multiples
WM's Enterprise Value to EBITDA ratio is in line with the industry average.
The rest of the industry has a similar Price/Free Cash Flow ratio as WM.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 43.49 | ||
| EV/EBITDA | 18.01 |
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)3.44
PEG (5Y)3.17
EPS Next 2Y11.37%
EPS Next 3Y10.68%
5. Dividend
5.1 Amount
WM has a Yearly Dividend Yield of 1.44%.
WM's Dividend Yield is rather good when compared to the industry average which is at 2.51. WM pays more dividend than 80.72% of the companies in the same industry.
With a Dividend Yield of 1.44, WM pays less dividend than the S&P500 average, which is at 2.45.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.44% |
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
44.06% of the earnings are spent on dividend by WM. This is a bit on the high side, but may be sustainable.
WM's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP44.06%
EPS Next 2Y11.37%
EPS Next 3Y10.68%
233.36
+4.56 (+1.99%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryCommercial Services & Supplies
Earnings (Last)
Earnings (Next)
Inst Owners84.94%
Inst Owner Change0.88%
Ins Owners0.2%
Ins Owner Change1.16%
Market Cap93.89B
Analysts77.42
Price Target245.25 (5.1%)
Short Float %0.97%
Short Ratio2.18
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.44% |
Yearly Dividend3.01
Dividend Growth(5Y)7.84%
DP44.06%
Div Incr Years21
Div Non Decr Years25
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-3.49%
Min EPS beat(2)-7.87%
Max EPS beat(2)0.88%
EPS beat(4)2
Avg EPS beat(4)0.67%
Min EPS beat(4)-7.87%
Max EPS beat(4)12.87%
EPS beat(8)3
Avg EPS beat(8)0.63%
EPS beat(12)5
Avg EPS beat(12)0.39%
EPS beat(16)7
Avg EPS beat(16)-0.18%
Revenue beat(2)0
Avg Revenue beat(2)-1.03%
Min Revenue beat(2)-1.25%
Max Revenue beat(2)-0.81%
Revenue beat(4)0
Avg Revenue beat(4)-2.31%
Min Revenue beat(4)-3.82%
Max Revenue beat(4)-0.81%
Revenue beat(8)0
Avg Revenue beat(8)-2.89%
Revenue beat(12)2
Avg Revenue beat(12)-2.22%
Revenue beat(16)3
Avg Revenue beat(16)-1.68%
PT rev (1m)0.66%
PT rev (3m)3.06%
EPS NQ rev (1m)-2.9%
EPS NQ rev (3m)-10.22%
EPS NY rev (1m)-0.14%
EPS NY rev (3m)-4.91%
Revenue NQ rev (1m)-0.44%
Revenue NQ rev (3m)6.24%
Revenue NY rev (1m)-0.6%
Revenue NY rev (3m)3.04%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.64 | ||
| Fwd PE | 26.02 | ||
| P/S | 4.26 | ||
| P/FCF | 43.49 | ||
| P/OCF | 17.42 | ||
| P/B | 11.38 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.01 |
EPS(TTM)7.15
EY3.06%
EPS(NY)8.97
Fwd EY3.84%
FCF(TTM)5.37
FCFY2.3%
OCF(TTM)13.4
OCFY5.74%
SpS54.84
BVpS20.51
TBVpS-23.3
PEG (NY)3.44
PEG (5Y)3.17
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.16% | ||
| ROE | 33.28% | ||
| ROCE | 10.83% | ||
| ROIC | 8.38% | ||
| ROICexc | 8.47% | ||
| ROICexgc | 15.84% | ||
| OM | 18.81% | ||
| PM (TTM) | 12.45% | ||
| GM | 39.34% | ||
| FCFM | 9.79% |
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-Score5
Asset Turnover0.5
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.73 | ||
| Debt/FCF | 11.07 | ||
| Debt/EBITDA | 3.51 | ||
| Cap/Depr | 142.52% | ||
| Cap/Sales | 14.64% | ||
| Interest Coverage | 7.83 | ||
| Cash Conversion | 84.01% | ||
| Profit Quality | 78.62% | ||
| Current Ratio | 0.76 | ||
| Quick Ratio | 0.73 | ||
| Altman-Z | 2.78 |
F-Score5
WACC7.63%
ROIC/WACC1.1
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 Y9.48%
EPS Next 2Y11.37%
EPS Next 3Y10.68%
EPS Next 5Y10.11%
Revenue 1Y (TTM)8.01%
Revenue growth 3Y7.16%
Revenue growth 5Y7.38%
Sales Q2Q%16.65%
Revenue Next Year16.02%
Revenue Next 2Y10.64%
Revenue Next 3Y8.59%
Revenue Next 5Y7.98%
EBIT growth 1Y8.53%
EBIT growth 3Y11.95%
EBIT growth 5Y8.54%
EBIT Next Year74.25%
EBIT Next 3Y26.18%
EBIT Next 5Y17.46%
FCF growth 1Y18.37%
FCF growth 3Y-3.92%
FCF growth 5Y0.98%
OCF growth 1Y14.22%
OCF growth 3Y7.51%
OCF growth 5Y6.83%