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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Waste Management, Inc. (XNYS:WM) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
WM
Name:
WASTE MANAGEMENT, INC. (XNYS:WM)
Sector:
840.00M
Industry:
Waste Management
CEO:
Mr. James Fish
Total Employees:
48,500
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -47.50% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF WASTE MANAGEMENT, INC.(WM) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND WASTE MANAGEMENT INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
168.45
One Month Price Target:
$169.17
Six Month Price Target :
$172.77
Likely Price in One Year's Time:
Ticker:
$177.08
Likely Trading Range Today Under (Normal Volatility)
$168.11
Price Upper limit ($) :
$169.04
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$162.97
This week:
$156.19
This month :
$143.93
Other Primary facts
Market Cap:
69.92B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
413.34M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
9.05%
-11.12%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$193.86
$182.03
$143.04
$154.87
Medium risk (<10%) entry points
Buy Call
Sell Call
$178.18
Buy Put:
Sell Put:
$175.65
$158.69
$161.25
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
WM
Sharpe Ratio:
3.98%
Comparison:
WM, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 64.99% higher than the industry
& ratio is 74.76% higher than the market/S&P 500 average
Average Returns/Yield of
WM
Daily returns:
0.07%
Weekly returns:
0.37%
Monthly returns:
1.47%
Yearly returns:
15.29%
Comparison of returns:
Average annual returns/yield (last 3 years) is 15.20% above industry average
Classification:
WM, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.83
Statistical test of Returns:
WM has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.62%
Weekly Volatility:
3.62%
Monthly Volatility:
7.25%
Yearly Volatility:
25.10%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.74%
Volatility in last five trading days has been -54.31% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-3.25%
Weekly VaR:
-7.28%
Monthly VaR:
-14.55%
How Much Can the price of
WM
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-12%
Worst case (decline):
-50.42%
This translates to price declining to:
$148.19
This translates to price declining to:
$83.52
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
WM is a 2.72% riskier investment compared to the market/S&P 500 & is -12.00% less risky than Nasdaq(IXIC)
Risk (measured by volatility) is -39.34% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
WM
Beta in relation to market/S&P 500--0.76
Expected beta in 1 year's time:
0.626
Expected beta in 3 year's time:
0.885
Unlevered (debt free) Beta:
0.316
Beta in relation to Nasdaq (XNAS):
0.469
Beta in relation to all global stocks::
0.562
Beta Comparison & Analysis
Beta of competitors/peers::
0.961
Beta is -20.69% lower than peers
Average Industry Beta:
1.031
Beta is -26.06% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
11.71%
Sustainable growth rate is -8.02% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.092
Alpha is 82.04% above industry average alpha yield
Alpha is 588% higher than market/& is unsustainably high
Analysis of Cost of Capital of
WM
Equity cost of capital:
0.084
Equity cost of capital is -18.03% below industry mean WACC
Unlevered (without debt) cost of capital:
3.47%
Before-tax cost of debt:
2.62%
After-tax cost of debt:
2.07%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.07%
WACC is -20.22% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$44.71
Revenue growth rate per share of (3Y):
9.74
Annual revenue growth rate is 117.54% above the industry average
EPS:
$4.53
Expected Annual growth rate of EPS (3Y):
2.96%
Expected future EPS growth rate is -31.53% lower than the Waste Management industry
Free cash flow (FCF) per share:
$5.73
Balance sheet equity growth per share: 22.69%
Equity growth rate per share is -202.70% lower than the industry
Debt per share
$31.58
EBITDA per share
$11.70
Valuation Analysis Today of
WM
P/E Ratio:
32.93
P/E Ratio of Competitors/Peers:
31.04
P/E ratio is 6.09% higher than main peers & is 32.00% higher than the industry
Stock price/value with industry average P/E ratio: $113.02
WM is 49.04% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $60.34
Present value of the expected future dividends only: $42.68
P/S (Price to Sales ratio):
3.77
Price to sales ratio is 56.10% above the industry mean
P/B (Price to book value ratio):
9.74
Price to free cash flow: 29.39
Price to free cash flow ratio is -16.57% lower than the industry
Net income growth rate (3Y):
-4.30%
Net income growth rate is -106.94% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 14.41%
Dividend yeild: 1.45%
Previous Dividend: $0.65
Previous adjusted dividend: $0.65
Previous Dividend: $2.45
Expected next dividend best case: $0.69
Expected next dividend worst case: $0.61
Average dividend payment (long-term): $0.57
Average dividend increase/decrease (growth rate) % per period: 2.49%
Expected next dividend payment date: 15/09/2022
Expected next dividend record date: 09/01/2022
-
Previous dividend payment date: 17/06/2022
Previous dividend record date: 06/03/2022
-
Dividend History:
2022-06-02--$0.65
2021-12-02--$0.58
2021-06-03--$0.58
2022-03-16--$0.65
2021-09-02--$0.58
2021-03-11--$0.58
Dividend growth rate is -119.48% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
182.70%
Net debt to equity ratio:
186.62%
Debt to assets ratio:
44.67%
Net debt to assets ratio:
45.63%
Debt-to-asset ratio is -27.44% below industry average
Ability to repay debt:
Interest coverage ratio:
13.7
Interest coverage ratio is 29.91% more than industry average
Looking forward:
Debt growth rate:
-2.93%
Annual debt growth is -128% lower than industry average debt growth rate
Debt repayment rate in last quarter: 15.92%
Analysis of Key Statistics
Correlation of price movement with the market:
0.686
Statistical significance of correlation:
WM has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.559
Stock price is 22.63% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.559
Correlation of price movement with Nasdaq (^IXIC):
0.052
Covariance of price movement with the market:
0.049
Kurtosis
9.395
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.446
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
WM
Gross Profit Margin Ratio:
151%
Operating Profit Margin Ratio:
16.68%
Operating profit margin is 187.73% higher than the industry
Net Profit Margin Ratio:
151%
Effective Tax Rate:
22.83%
Effective tax rate is -6.61% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
26.71%
Return on equity (ROE) is 130.26% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
6.53%
Return on assets (ROA) is 60.24% higher than the industry
Financial Leverage:
1.8x
Current Ratio:
0.8
Current ratio is -41.25% below industry average
Cash Conversion Cycle (days):
-9.7
Cash conversion cycle is -119.51% below industry average
The remaining useful life of property plant & equipment is: 0.0 years
Stock based compensation to net income ratio:
1.31%
In-depth Efficiency Analysis
Revenue generated per employee:
381.0K
Each employee generates 24% more revenue than industry average revenue per employee
EBITDA generated per employee:
99.7K
Each employee generates 66% more EBITDA than industry average revenue per employee
Profit generated per employee:
39.3K
Each employee generates 85% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
17.3K
Each employee generates 198% more free cash flow than industry average revenue per employee
Assets/Capital per employee
539.4K
Each employee generates 198% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
WM
EATON CORPORATION PUBLIC LIMITED COMPANY (XNYS:ETN)
FEDEX CORPORATION (XNYS:FDX)
CANADIAN PACIFIC RAILWAY LIMITED (XNYS:CP)
NORTHROP GRUMMAN CORPORATION (XNYS:NOC)
GENERAL DYNAMICS CORPORATION (XNYS:GD)
ILLINOIS TOOL WORKS INC. (XNYS:ITW)
EMERSON ELECTRIC CO. (XNYS:EMR)
JOHNSON CONTROLS INTERNATIONAL PLC (XNYS:JCI)
THOMSON REUTERS CORPORATION (XNYS:TRI)
Current Analyst Ratings
Strong buy�13%
Buy�13%
Hold�21%
Sell�4%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
18.48B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
11.50B
6.98B
-
1.86B
1.86B
-
2.05B
3.91B
-
353.00M
2.01B
4.84B
3.08B
1.91B
2.48B
565.00M
1.91B
Statement of Cash Flow
Date:
Period:
482.00M
Differed Income Tax :
- 11000.00K
Stock Based Compensation :
25.00M
Change in Working Capital :
182.00M
Accounts Receivables:
-
Other Working Capital:
- 11000.00K
Other Non-Cash Items:
66.00M
Net Cash Provided by Operating Activities:
1.26B
Investments in PP&E:
-
Net Acquisitions:
- 4000.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
155.00M
-
155.00M
2.48B
149.00M
276.00M
3.06B
14.30B
9.03B
868.00M
625.00M
-
1.34B
26.16B
-
29.22B
1.38B
435.00M
-
600.00M
1.39B
3.81B
13.05B
3.54B
18.27B
-
22.07B
6.00M
12.25B
15.0M
-
March 31, 2022 at 6:00:00 AM
15.41B
7.14B
29.22B
-
13.49B
13.3B
-
- 568000.00K
- 572000.00K
- 2471000.00K
-
- 250000.00K
- 275000.00K
2.36B
- 635000.00K
1.00M
52.00M
246.00M
194.00M
1.26B
- 418000.00K
840.00M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
WM
2023
2024
2025
2026
2027
$185.28
$194.77
$204.75
$215.24
$226.27