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Waste Management (WM)
NYSE:WM
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Waste Management
(NYSE:WM)80Outperform
Positive Factors
Guidance
Solid 2025 guidance removes substantial uncertainty.
Synergies
A doubling of Stericycle synergies to $250MM alleviates integration concerns and de-risks the investment story.
Negative Factors
Outlook
The company seemed to back away from the long-term outlook for 13-17% EBITDA growth.
Waste Management (WM) vs. S&P 500 (SPY)
Market Cap
$90.86B
Dividend Yield1.33%
Average Volume (3M)1.68M
Price to Earnings (P/E)33.2
Beta (1Y)0.39
Revenue Growth8.01%
EPS Growth20.17%
CountryUS
Employees61,700
SectorIndustrials
Sector Strength66
IndustryWaste Management
Share Statistics
EPS (TTM)6.81
Shares Outstanding402,115,450
10 Day Avg. Volume1,756,590
30 Day Avg. Volume1,677,097
Financial Highlights & Ratios
PEG Ratio1.65
Price to Book (P/B)N/A
Price to Sales (P/S)4.12
Price to Cash Flow (P/CF)15.00
P/FCF Ratio57.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$241.56Price Target Upside5.23% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering18
Waste Management Business Overview & Revenue Model
Company DescriptionWaste Management, Inc. (WM) is a leading provider of comprehensive waste management and environmental services in North America. The company operates in the sectors of waste collection, transfer, recycling, and disposal services. WM's core offerings include waste collection for residential, commercial, industrial, and municipal customers, as well as landfill operations, recycling services, and renewable energy projects. Headquartered in Houston, Texas, WM is committed to sustainability and innovation in waste management solutions.
How the Company Makes MoneyWaste Management, Inc. generates revenue primarily through its various waste management services. The company's key revenue streams include collection services, where it charges fees for picking up waste from residential, commercial, and industrial clients. Additionally, WM earns from its landfill operations by charging tipping fees for waste disposal at its sites. Recycling services provide another revenue stream, where WM processes recyclable materials and sells them to manufacturers. The company also invests in renewable energy projects, such as landfill gas-to-energy initiatives, which contribute to its earnings. Strategic partnerships with municipalities and businesses, along with long-term contracts, play a significant role in ensuring stable revenue streams for Waste Management.
Waste Management Financial Statement Overview
Summary
Waste Management shows steady revenue and profit growth driven by effective cost management and strong cash flow generation. Despite a robust equity position, high leverage presents potential risks.Income Statement
Waste Management has showcased strong revenue growth over the years, with a notable increase from $15.22 billion in 2020 to $22.06 billion in 2024. The gross profit margin remains healthy, with the latest figures indicating efficiency in cost management. Net profit margin has improved considerably, reflecting enhanced profitability. EBIT and EBITDA margins also show robust operational performance, indicating a well-managed cost structure and efficient operations.85
Very Positive
Balance Sheet
The company's balance sheet reflects a solid equity base with stockholders' equity increasing over time. However, the debt-to-equity ratio is high, indicating potential leverage risks. Return on equity has been strong, illustrating efficient use of shareholder funds. The company's equity ratio has improved, suggesting a stronger financial position, although the absence of total asset figures for 2024 limits the full analysis.75
Positive
Cash Flow
Operating cash flow has steadily increased, supporting the company's liquidity and operational efficiency. Free cash flow growth has been consistent, indicating positive cash generation beyond capital expenditures. The operating cash flow to net income ratio highlights robust cash earnings quality, while the free cash flow to net income ratio emphasizes strong conversion of profits into cash.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 22.06B | 20.43B | 19.70B | 17.93B | 15.22B | Gross Profit |
| 8.68B | 7.82B | 7.40B | 6.82B | 5.88B | EBIT |
| 4.06B | 3.58B | 3.37B | 2.96B | 2.43B | EBITDA |
| 6.42B | 5.59B | 5.47B | 4.96B | 4.15B | Net Income Common Stockholders |
| 2.75B | 2.30B | 2.24B | 1.82B | 1.50B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 614.00M | 458.00M | 351.00M | 118.00M | 553.00M | Total Assets |
| 44.57B | 32.82B | 31.37B | 29.10B | 29.34B | Total Debt |
| 23.90B | 16.23B | 14.98B | 13.40B | 13.81B | Net Debt |
| -414.00M | 15.77B | 14.63B | 13.29B | 13.26B | Total Liabilities |
| 36.31B | 25.93B | 24.50B | 21.97B | 21.89B | Stockholders Equity |
| 8.25B | 6.90B | 6.85B | 7.12B | 7.45B |
| Cash Flow | Free Cash Flow | |||
| 2.16B | 1.82B | 1.95B | 2.43B | 1.77B | Operating Cash Flow |
| 5.39B | 4.72B | 4.54B | 4.34B | 3.40B | Investing Cash Flow |
| -10.60B | -3.09B | -3.06B | -1.89B | -4.85B | Financing Cash Flow |
| 5.16B | -1.52B | -1.22B | -2.90B | -1.56B |
Waste Management Technical Analysis
Positive
229.55
Price Trends
217.67
Positive
217.09
Positive
211.90
Positive
Market Momentum
2.98
Positive
57.39
Neutral
35.43
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WM, the sentiment is Positive. The current price of 229.55 is above the 20-day moving average (MA) of 228.78, above the 50-day MA of 217.67, and above the 200-day MA of 211.90, indicating a bullish trend. The MACD of 2.98 indicates Positive momentum. The RSI at 57.39 is Neutral, neither overbought nor oversold. The STOCH value of 35.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WM.
Waste Management Risk Analysis
Waste Management disclosed 34 risk factors in its most recent earnings report. Waste Management reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Waste Management Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $90.86B | 33.19 | 36.24% | 1.33% | 8.01% | 20.17% | |
75 Outperform | $72.29B | 35.67 | 18.61% | 0.96% | 7.13% | 18.68% | |
74 Outperform | $71.83B | 85.09 | 7.86% | 0.63% | 12.88% | -19.09% | |
70 Outperform | $10.89B | 26.62 | 16.69% | ― | 8.89% | 6.76% | |
64 Neutral | $7.07B | 489.65 | 1.05% | ― | 23.15% | -50.55% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
WM
Waste Management
229.55
23.23
11.26%
CWST
Casella Waste
112.47
18.65
19.88%
CLH
Clean Harbors
197.07
10.43
5.59%
RSG
Republic Services
234.18
51.99
28.54%
TSE:WCN
Waste Connections
272.51
47.83
21.29%
Waste Management Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 9.54% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance in 2024, driven by significant EBITDA growth, strategic acquisitions, and investments in sustainability. Challenges remain in industrial volume and commodity price pressures, but overall, the outlook for 2025 remains positive with continued focus on operational efficiency and strategic growth initiatives.Highlights
Record Operating EBITDA Growth
WM achieved operating EBITDA growth of more than 10% in their Legacy Business for 2024, marking a significant milestone with a 30% full-year operating EBITDA margin for the first time in company history.
Sustainability and Renewable Energy Investments
WM brought five renewable natural gas facilities online, expanded their renewable energy platform, and advanced automation upgrades at 10 recycling facilities in 2024.
Successful Stericycle Acquisition
WM completed the acquisition of Stericycle in November, integrating its operations, and expects $250 million of synergies over three years, with up to $100 million in 2025.
Strong Cash Flow Generation
Cash flow from operations grew more than 14% to $5.39 billion in 2024, with a 22.5% increase in free cash flow before sustainability growth investments.
Collection and Disposal Business Performance
Operating EBITDA in the Collection and Disposal business grew 10.4% in 2024, achieving a 37.2% margin, the highest ever for this segment.
Lowlights
Industrial Volume Challenges
The industrial business remains soft, with WM rolling out growth programs to enhance volume capture at appropriate pricing levels.
Potential Headwinds from Expiring Tax Credits
WM faces a headwind from the expiration of alternative fuel tax credits in 2025, impacting the Collection and Disposal business.
Sustainability Commodity Price Pressure
Recycling commodity prices are assumed to be lower in 2025 at $85 per ton, down from $92 per ton in 2024, potentially impacting earnings.
Company Guidance
In the WM Fourth Quarter 2024 Earnings Conference Call, the company provided comprehensive guidance for 2025, highlighting expected operational and financial growth. The Collection and Disposal business is projected to achieve over 7% operating EBITDA growth, despite the $63 million headwind from the expiration of alternative fuel tax credits. The company plans to maintain a positive price-to-cost spread, with core price increases anticipated between 5.8% and 6.2%, and yield expected between 4% and 4.2%. Additionally, WM's sustainability segments are forecasted to contribute $150 million to operating EBITDA growth, with total company operating EBITDA expected to grow by 15%, or nearly $1 billion, in 2025. The acquisition of Stericycle is expected to generate $250 million in synergies over three years, with up to $100 million in 2025. Free cash flow is projected to increase by more than 17% to $2.725 billion, supported by capital expenditures targeted between $3.175 billion and $3.275 billion. The company also expects cash flow from operations to grow more than 14% to $5.39 billion, emphasizing WM's strategic focus on operational efficiency, sustainability leadership, and disciplined capital allocation to enhance shareholder value.Waste Management Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Waste Management Grants Executive Incentive Awards for 2025
Neutral
Feb 28, 2025
On February 25, 2025, Waste Management, Inc. granted annual incentive awards to its executive officers, including performance share units (PSUs) and stock options under the 2023 Stock Incentive Plan. The PSUs are linked to cash flow generation and total shareholder return relative to the S&P 500, with payouts ranging from 0 to 200% of the target amount. Stock options have a 10-year term and vest over three years. Additionally, annual cash incentive awards were granted, based on performance measures like operating EBITDA and internal revenue growth, with potential adjustments for sustainability scores and individual performance. These incentives aim to align executive compensation with company performance and shareholder value, impacting the company’s operational focus and stakeholder interests.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.