Waste Management Inc (NYSE: WM)

Sector: Industrials Industry: Waste Management CIK: 0000823768
Market Cap 99.66 Bn
P/B 18.50
P/E 99.17
P/S 7.44
ROIC (Qtr) 9.59
Div Yield % 1.08
Rev 1y % (Qtr) 14.87
Total Debt (Qtr) 23.36 Bn
Debt/Equity (Qtr) 2.45

About

Waste Management, Inc., widely recognized by its stock symbol WM, is a prominent player in the environmental solutions industry, with its operations spanning across North America (Waste Management, Inc.). The company's business activities encompass a broad spectrum of services, including waste collection, transfer, disposal, recycling, and renewable energy production. Its primary offerings include waste collection, transfer, and disposal services, as well as recycling and renewable energy solutions (WM's main business activities). WM's customer...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 5.86B provides strong 34.65x coverage of stock compensation 169M, indicating sustainable incentive practices.
  • Tangible assets of 27.84B provide exceptional 39.89x coverage of deferred revenue 698M, showing strong service capability backing.
  • Strong operating cash flow of 5.86B provides 2.10x coverage of SG&A expenses 2.79B, showing efficient operational cost management.
  • Operating cash flow of 5.86B provides exceptional 5856x coverage of minority interest expenses 1M, showing strong core operations.
  • Operating cash flow of 5.86B provides strong 8.39x coverage of deferred revenue 698M, indicating service delivery capability.

Bear case

  • Operating cash flow of 5.86B barely covers its investment activities of (10.46B), with a coverage ratio of -0.56, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 5.86B provides thin coverage of dividend payments of (1.30B) with a -4.50 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 175M provide limited coverage of acquisition spending of (6.93B), which is -0.03x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 4.02B relative to inventory of 223M (18.01 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 4.08B show weak coverage of depreciation charges of 2.75B, with a 1.49 ratio indicating high capital intensity and potential reinvestment needs.

Geographical Breakdown of Revenue (2024)

Subsegments Breakdown of Revenue (2024)

Peer comparison

Companies in the Waste Management
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 WM Waste Management Inc 99.66 Bn 99.17 7.44 23.36 Bn
2 RSG Republic Services, Inc. 73.30 Bn 99.83 7.97 13.27 Bn
3 WCN Waste Connections, Inc. 42.09 Bn 67.66 4.50 8.96 Bn
4 GFL GFL Environmental Inc. 16.72 Bn 6.39 3.34 5.71 Bn
5 CLH Clean Harbors Inc 13.63 Bn 35.09 2.29 3.02 Bn
6 CWST Casella Waste Systems Inc 6.36 Bn 417.00 3.54 1.23 Bn
7 NVRI ENVIRI Corp 1.48 Bn -8.91 0.66 1.67 Bn
8 MEG Montrose Environmental Group, Inc. 0.86 Bn -30.94 1.04 0.37 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.38 1.86
EV to Cash from Ops. EV/CFO 43.32 1.99
EV to Debt EV to Debt 4.65 141.65
EV to EBIT EV/EBIT 68.17 10.83
EV to EBITDA EV/EBITDA 31.11 -3.88
EV to Free Cash Flow [EV/FCF] EV/FCF 83.47 9.06
EV to Market Cap EV to Market Cap 1.09 0.66
EV to Revenue EV/Rev 8.11 8.81
Price to Book Value [P/B] P/B 18.50 4.15
Price to Earnings [P/E] P/E 99.17 33.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.97 4.52
Dividend Payout Ratio % Div Payout % (Qtr) 50.70 7.28
Dividend per Basic Share Div per Share (Qtr) 3.23 0.36
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 54.17 6.04
Interest Coverage Int. cover (Qtr) 4.58 -114.06
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -9.37 -42.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -71.50 59.31
Dividend Growth (1y) % Div 1y % (Qtr) 9.49 0.43
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 7.68 1,182.04
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 12.31 332.85
EBIT Growth (1y) % EBIT 1y % (Qtr) 3.24 973.21
EBT Growth (1y) % EBT 1y % (Qtr) -6.92 159.54
EPS Growth (1y) % EPS 1y % (Qtr) -3.19 85.89
FCF Growth (1y) % FCF 1y % (Qtr) 14.22 -19.83
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 17.85 10.50
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.54 0.60
Cash Payout Ratio Cash Payout (Qtr) 0.14 0.02
Cash Ratio Cash Ratio (Qtr) 0.03 0.60
Current Ratio Curr Ratio (Qtr) 0.84 1.57
Debt to Equity Ratio Debt/Equity (Qtr) 2.45 0.73
Interest Cover Ratio Int Coverage (Qtr) 4.58 -114.06
Times Interest Earned Times Interest Earned (Qtr) 4.58 -114.06
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 27.50 -42.95
EBIT Margin % EBIT Margin % (Qtr) 16.46 -56.49
EBT Margin % EBT Margin % (Qtr) 12.87 -61.58
Gross Margin % Gross Margin % (Qtr) 40.00 17.43
Net Profit Margin % Net Margin % (Qtr) 10.30 -71.04