WASTE MANAGEMENT INC (WM) Stock Fundamental Analysis
NYSE:WM - New York Stock Exchange, Inc. - US94106L1098 - Common Stock - Currency: USD
Overall WM gets a fundamental rating of 4 out of 10. We evaluated WM against 83 industry peers in the Commercial Services & Supplies industry. WM has an excellent profitability rating, but 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
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.
WM had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
WM has a better Return On Assets (6.01%) than 69.88% of its industry peers.
WM has a better Return On Equity (30.92%) than 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
The Profit Margin of WM (11.67%) is better than 81.93% of its industry peers.
WM's Profit Margin has improved in the last couple of years.
WM has a better Operating Margin (18.16%) than 86.75% of its industry peers.
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.
WM's Gross Margin has declined in the last couple of years.
| 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
Compared to 1 year ago, WM has a worse debt to assets ratio.
2.2 Solvency
WM has an Altman-Z score of 2.83. 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.
WM has a Altman-Z score of 2.83. This is comparable to the rest of the industry: WM outperforms 56.63% of its industry peers.
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.
WM has a Debt to FCF ratio (12.98) which is in line with its industry peers.
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: 81.93% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.65 | ||
| Debt/FCF | 12.98 | ||
| Altman-Z | 2.83 |
ROIC/WACC1.06
WACC7.73%
2.3 Liquidity
WM has a Current 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 has a Current ratio of 0.83. This is amonst the worse of the industry: WM underperforms 81.93% of its industry peers.
A Quick Ratio of 0.79 indicates that WM may have some problems paying 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 79.52% of its industry peers.
| 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.
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.
The Revenue has grown by 10.77% in the past year. This is quite good.
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.
The Revenue is expected to grow by 7.69% on average over the next years.
EPS Next Y8.72%
EPS Next 2Y10.64%
EPS Next 3Y10.97%
EPS Next 5Y8.88%
Revenue Next Year16.24%
Revenue Next 2Y10.83%
Revenue Next 3Y8.64%
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
WM is valuated quite expensively with a Price/Earnings ratio of 31.61.
WM's Price/Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Earnings ratio of 27.30, WM is valued at the same level.
Based on the Price/Forward Earnings ratio of 25.54, the valuation of WM can be described as expensive.
WM's Price/Forward Earnings ratio is in line with the industry average.
WM is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.61 | ||
| Fwd PE | 25.54 |
4.2 Price Multiples
WM's Enterprise Value to EBITDA is on the same level as the industry average.
WM's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 49.51 | ||
| EV/EBITDA | 17.41 |
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)3.62
PEG (5Y)3.07
EPS Next 2Y10.64%
EPS Next 3Y10.97%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.45%, WM has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.44, WM pays a bit more dividend than its industry peers.
WM's Dividend Yield is slightly below the S&P500 average, which is at 2.37.
| 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 paid a dividend for at least 10 years, which is a reliable track record.
WM has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
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.
WM's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP46.32%
EPS Next 2Y10.64%
EPS Next 3Y10.97%
226.01
+0.36 (+0.16%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryCommercial Services & Supplies
Earnings (Last)
Earnings (Next)
Inst Owners83.91%
Inst Owner Change0.04%
Ins Owners0.2%
Ins Owner Change2.73%
Market Cap90.95B
Analysts77.65
Price Target253.93 (12.35%)
Short Float %0.9%
Short Ratio2.12
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)0.59%
PT rev (3m)4.38%
EPS NQ rev (1m)-0.4%
EPS NQ rev (3m)-0.87%
EPS NY rev (1m)0.04%
EPS NY rev (3m)-0.84%
Revenue NQ rev (1m)-0.06%
Revenue NQ rev (3m)-0.52%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)0.05%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.61 | ||
| Fwd PE | 25.54 | ||
| P/S | 3.97 | ||
| P/FCF | 49.51 | ||
| P/OCF | 17.39 | ||
| P/B | 10.51 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.41 |
EPS(TTM)7.15
EY3.16%
EPS(NY)8.85
Fwd EY3.92%
FCF(TTM)4.57
FCFY2.02%
OCF(TTM)13
OCFY5.75%
SpS56.96
BVpS21.5
TBVpS-22.1
PEG (NY)3.62
PEG (5Y)3.07
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 | 2.83 |
F-Score4
WACC7.73%
ROIC/WACC1.06
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 Y8.72%
EPS Next 2Y10.64%
EPS Next 3Y10.97%
EPS Next 5Y8.88%
Revenue 1Y (TTM)10.77%
Revenue growth 3Y7.16%
Revenue growth 5Y7.38%
Sales Q2Q%16.65%
Revenue Next Year16.24%
Revenue Next 2Y10.83%
Revenue Next 3Y8.64%
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%