Report
Valens Research

WM - Embedded Expectations Analysis - 2020 05 11

Waste Management, Inc. (WM:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 35.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their pricing power, volume growth, and cost savings initiatives

Specifically, management may lack confidence in their ability to continue raising prices, limit cost increases, and expand their margins. Moreover, they may have concerns about lower volume growth expectations, cost inflation, and low commodity prices in their recycling business. Furthermore, they may lack confidence in their ability to sustain operating cash flow growth, improve their collection efficiency, and execute their long-term capital allocation priorities and cost savings initiatives. Additionally, they may be exaggerating the progress of their enterprise resource planning (ERP) system transition, their ability to sustain stock repurchases, and the potential of the Advanced Disposal acquisition
Underlying
Waste Management Inc.

Waste Management is a holding company. Through its subsidiaries, the company is a provider of waste management environmental services. The company partners with its residential, commercial, industrial and municipal customers and the communities it serves to manage and reduce waste at each stage from collection to disposal, while recovering resources and creating renewable energy. The company's Solid Waste business is operated and managed by its subsidiaries that focus on various geographic areas and provide collection, transfer, disposal, and recycling and resource recovery services. Through its subsidiaries, the company is also a developer, operator and owner of landfill gas-to-energy facilities.

Provider
Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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Many years later, our business model remains because little has changed on Wall Street.

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Valens Research

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