Waste Management Inc

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WM : NYSE : Industrial Goods
$69.66 | %
Today's Range: 69.45 - 69.83
Avg. Daily Volume: 1921900.0
01/20/17 - 4:02 PM ET

Financial Analysis


WASTE MANAGEMENT INC's gross profit margin for the third quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased. WASTE MANAGEMENT INC has weak liquidity. Currently, the Quick Ratio is 0.78 which shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year.

At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by 2.36% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

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Income Statement Q3 FY16 Q3 FY15
Net Sales ($mil)3548.03360.0
EBITDA ($mil)1025.0959.0
EBIT ($mil)666.0605.0
Net Income ($mil)302.0335.0


Balance Sheet Q3 FY16 Q3 FY15
Cash & Equiv. ($mil)30.0113.0
Total Assets ($mil)20756.020402.0
Total Debt ($mil)9261.09050.0
Equity ($mil)5359.05235.0


Profitability Q3 FY16 Q3 FY15
Gross Profit Margin38.1938.36
EBITDA Margin28.8828.54
Operating Margin18.7718.01
Sales Turnover0.650.64
Return on Assets5.395.24
Return on Equity20.8920.43
Debt Q3 FY16 Q3 FY15
Current Ratio0.860.98
Debt/Capital0.630.63
Interest Expense96.099.0
Interest Coverage6.946.11


Share Data Q3 FY16 Q3 FY15
Shares outstanding (mil)442.0446.47
Div / share0.410.39
EPS0.680.74
Book value / share12.1211.73
Institutional Own % n/a n/a
Avg Daily Volume1883797.02100529.0

Valuation


BUY. The current P/E ratio indicates a discount compared to an average of 33.23 for the Commercial Services & Supplies industry and a premium compared to the S&P 500 average of 25.49. Conducting a second comparison, its price-to-book ratio of 5.76 indicates a significant premium versus the S&P 500 average of 2.84 and a premium versus the industry average of 4.83. The current price-to-sales ratio is above the S&P 500 average, but below the industry average. The valuation analysis reveals that, WASTE MANAGEMENT INC seems to be trading at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
WM 27.84 Peers 33.23   WM 11.34 Peers 15.92

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

WM is trading at a discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

WM is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
WM 22.08 Peers 32.36   WM 0.36 Peers 2.74

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

WM is trading at a significant discount to its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

WM trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
WM 5.76 Peers 4.83   WM 7.26 Peers 61.27

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

WM is trading at a premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, WM is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
WM 2.31 Peers 2.39   WM 1.84 Peers 7.51

Average. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

WM is trading at a valuation on par with its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

WM significantly trails its peers on the basis of sales growth

 

 

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