WM - Embedded Expectations Analysis - 2021 07 16
Waste Management, Inc. (WM:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 39.0x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about their renewable energy investments, labor costs, and their differentiation.Specifically, management may lack confidence in their ability to sustain operating EBITDA, maintain dividends from renewable energy investments, and execute their environmental sustainability strategy. In addition, they may have concerns about the impact of weather on volumes during the winter, inflationary pressures, and performance comps for 2021. Furthermore, they may be concerned about third-party labor costs and the sustainability of demand in domestic and export markets. Finally, they may be overstating the differentiation and benefits of their customer service digitalization, and they may lack confidence in their ability to maintain efficiency gains from shortened workweeks and capture landfill gas opportunities
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.
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