Intrinsic Value Waste Management, Inc. (0LTG.L)

• Previous Close: £220.04
• Intrinsic Value: £149.93
• Upside potential: -32%

Stock Valuation Context

Business Model And Market Position

Waste Management, Inc. is a leading provider of comprehensive waste management and environmental services across North America, serving residential, commercial, industrial, and municipal customers. The company operates an extensive network of landfills, transfer stations, and material recovery facilities, positioning itself as a vertically integrated player in the waste management sector. Its core revenue model is built on collection services, recycling operations, and landfill gas-to-energy projects, which provide stable, recurring income streams. Waste Management differentiates itself through its scale, operational efficiency, and commitment to sustainability, including recycling brokerage and specialized disposal services for industries like oil and gas. The company’s market leadership is reinforced by its vast infrastructure, regulatory expertise, and ability to capitalize on growing demand for sustainable waste solutions. As environmental regulations tighten and recycling becomes more critical, Waste Management is well-positioned to benefit from long-term industry tailwinds.

Revenue Profitability And Efficiency

Waste Management reported revenue of $22.06 billion for the latest fiscal year, with net income reaching $2.75 billion, reflecting strong profitability. The company’s operating cash flow of $5.39 billion underscores its ability to generate cash from core operations, while capital expenditures of $3.23 billion indicate ongoing investments in infrastructure and sustainability initiatives. Its diluted EPS of $6.81 demonstrates efficient earnings distribution across its 401.5 million outstanding shares.

Earnings Power And Capital Efficiency

The company’s earnings power is supported by its high-margin landfill operations and recycling services, which benefit from economies of scale. Waste Management’s capital efficiency is evident in its ability to maintain robust cash flows while funding growth projects, such as landfill gas-to-energy facilities. Its disciplined capital allocation ensures sustainable returns for shareholders.

Balance Sheet And Financial Health

Waste Management maintains a solid balance sheet with $422 million in cash and equivalents, though its total debt stands at $24.94 billion. The company’s leverage is manageable given its stable cash flows and industry-leading position. Its financial health is further supported by consistent operating performance and access to capital markets for refinancing or strategic investments.

Growth Trends And Dividend Policy

The company has demonstrated steady growth through organic expansion and strategic acquisitions in the waste management sector. Its dividend policy is shareholder-friendly, with a dividend per share of $3.075, reflecting a commitment to returning capital. Waste Management’s growth is aligned with increasing demand for sustainable waste solutions and recycling services.

Valuation And Market Expectations

With a market capitalization of approximately $94.39 billion and a beta of 0.68, Waste Management is viewed as a stable, low-volatility investment. The market expects continued steady performance, driven by its entrenched market position and ability to pass on cost increases to customers. Valuation multiples reflect its premium positioning in the waste management industry.

Strategic Advantages And Outlook

Waste Management’s strategic advantages include its extensive infrastructure, regulatory expertise, and focus on sustainability, which align with global environmental trends. The outlook remains positive, supported by stable demand for waste services and growth opportunities in recycling and renewable energy. The company is well-positioned to navigate regulatory changes and capitalize on industry consolidation.

Sources

Company filings, investor presentations, Bloomberg