Fundamental analysis
Waste Management was founded in 1968 in Chicago, Illinois USA. Today it is headquartered in Houston, Texas. WM is engaged in waste treatment (landfill, thermal recovery), as well as related services business. The company focuses on sustainable development and respect for the environment, so it changed its name to «WM» in 2022 to represent a wide range of services and not just waste collection as the name «Waste Management» suggests.
The company owns the highest number of garbage trucks in the US. Together with its largest competitor, Republic Services, it provides collection of more than 50% of all waste in the US.
The company has grown through aggressive acquisitions. More than 130 between 1968 and 1973 alone.
WM is a counter-cyclical stock.
Results
For 2023, the company reported sales growth of 3.7%.
EBITDA grew 7% to $5.9 billion. Margins grew to 28.9%.
Operating expenses fell 0.7% to about 61.7%.
Net profit was USD 2.3 billion on sales of USD 20.4 billion and costs of USD 12.6 billion.
The company has approximately 4 billion of free cash flow.
WM returned USD 2.44 billion to investors (USD 1.3 billion through share buybacks, USD 1.14 billion through dividends). The company plans to continue to repurchase shares in 2024 and plans to increase the dividend by USD 0.20.
Technical analysis
We are seeing strong price appreciation on the stock over the past 6 months. However, since March, there has been stagnation and the price has not moved higher. Thus, the RSI is in the middle band at 50.
The moving averages are in an uptrend but the spread between them is narrowing as the price does not rise further.
Volume is over 1 million shares traded per day, the stock is reasonably liquid.
The first major support is at $175, the whole number at $200 per share will also prevent a decline.
The PE is 29.9.
Conclusion
The company is expecting a gradual increase in its revenue and share buybacks at similar levels as in 2023. Although the advance declared, it does not seem to have convinced investors to continue buying the stock. The trend stop is visible. Given the type of business WM is in, we cannot expect any meteoric rise in revenues. It is more of a long-term investment with a dividend. However, if the price drops below $200 per share, the next resistance is up at $175, which could cause a solid fall.