Intrinsic value of Waste Management - WM

Previous Close

$90.15

  Intrinsic Value

$62.52

stock screener

  Rating & Target

sell

-31%

Previous close

$90.15

 
Intrinsic value

$62.52

 
Up/down potential

-31%

 
Rating

sell

We calculate the intrinsic value of WM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 39.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
Revenue, $m
  15,412
  16,377
  17,381
  18,428
  19,519
  20,656
  21,842
  23,081
  24,374
  25,725
  27,136
  28,613
  30,156
  31,771
  33,462
  35,231
  37,084
  39,025
  41,058
  43,189
  45,422
  47,762
  50,216
  52,790
  55,488
  58,318
  61,287
  64,401
  67,668
  71,096
Variable operating expenses, $m
  9,389
  9,934
  10,502
  11,093
  11,709
  12,352
  13,022
  13,722
  14,453
  15,216
  15,335
  16,169
  17,041
  17,954
  18,909
  19,909
  20,956
  22,053
  23,202
  24,406
  25,668
  26,990
  28,377
  29,831
  31,356
  32,955
  34,633
  36,393
  38,239
  40,176
Fixed operating expenses, $m
  3,123
  3,192
  3,262
  3,334
  3,407
  3,482
  3,559
  3,637
  3,717
  3,799
  3,883
  3,968
  4,055
  4,144
  4,236
  4,329
  4,424
  4,521
  4,621
  4,722
  4,826
  4,933
  5,041
  5,152
  5,265
  5,381
  5,500
  5,621
  5,744
  5,871
Total operating expenses, $m
  12,512
  13,126
  13,764
  14,427
  15,116
  15,834
  16,581
  17,359
  18,170
  19,015
  19,218
  20,137
  21,096
  22,098
  23,145
  24,238
  25,380
  26,574
  27,823
  29,128
  30,494
  31,923
  33,418
  34,983
  36,621
  38,336
  40,133
  42,014
  43,983
  46,047
Operating income, $m
  2,900
  3,251
  3,618
  4,001
  4,402
  4,822
  5,261
  5,721
  6,204
  6,709
  7,919
  8,476
  9,060
  9,673
  10,317
  10,993
  11,704
  12,451
  13,236
  14,060
  14,928
  15,840
  16,798
  17,806
  18,867
  19,982
  21,154
  22,388
  23,685
  25,049
EBITDA, $m
  5,500
  5,971
  6,463
  6,977
  7,513
  8,075
  8,662
  9,277
  9,920
  10,594
  11,300
  12,041
  12,817
  13,632
  14,486
  15,383
  16,325
  17,313
  18,351
  19,442
  20,587
  21,791
  23,055
  24,384
  25,780
  27,248
  28,791
  30,412
  32,116
  33,908
Interest expense (income), $m
  375
  513
  566
  623
  682
  744
  808
  875
  945
  1,018
  1,094
  1,173
  1,257
  1,343
  1,434
  1,529
  1,629
  1,733
  1,842
  1,957
  2,076
  2,202
  2,333
  2,471
  2,615
  2,767
  2,926
  3,093
  3,267
  3,451
  3,643
Earnings before tax, $m
  2,388
  2,685
  2,995
  3,319
  3,658
  4,014
  4,386
  4,776
  5,186
  5,616
  6,746
  7,219
  7,716
  8,239
  8,788
  9,364
  9,971
  10,608
  11,279
  11,984
  12,726
  13,506
  14,327
  15,191
  16,100
  17,056
  18,062
  19,120
  20,234
  21,406
Tax expense, $m
  645
  725
  809
  896
  988
  1,084
  1,184
  1,290
  1,400
  1,516
  1,821
  1,949
  2,083
  2,224
  2,373
  2,528
  2,692
  2,864
  3,045
  3,236
  3,436
  3,647
  3,868
  4,102
  4,347
  4,605
  4,877
  5,163
  5,463
  5,780
Net income, $m
  1,743
  1,960
  2,186
  2,423
  2,670
  2,930
  3,202
  3,487
  3,786
  4,099
  4,924
  5,270
  5,633
  6,014
  6,415
  6,836
  7,279
  7,744
  8,234
  8,748
  9,290
  9,860
  10,459
  11,089
  11,753
  12,451
  13,185
  13,958
  14,771
  15,627

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  23,211
  24,664
  26,177
  27,753
  29,395
  31,108
  32,895
  34,760
  36,707
  38,742
  40,868
  43,091
  45,416
  47,848
  50,394
  53,059
  55,850
  58,773
  61,835
  65,043
  68,406
  71,931
  75,627
  79,502
  83,566
  87,829
  92,299
  96,990
  101,910
  107,073
Adjusted assets (=assets-cash), $m
  23,211
  24,664
  26,177
  27,753
  29,395
  31,108
  32,895
  34,760
  36,707
  38,742
  40,868
  43,091
  45,416
  47,848
  50,394
  53,059
  55,850
  58,773
  61,835
  65,043
  68,406
  71,931
  75,627
  79,502
  83,566
  87,829
  92,299
  96,990
  101,910
  107,073
Revenue / Adjusted assets
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
Average production assets, $m
  19,203
  20,406
  21,657
  22,961
  24,320
  25,737
  27,215
  28,758
  30,370
  32,053
  33,812
  35,651
  37,575
  39,587
  41,693
  43,898
  46,207
  48,625
  51,159
  53,813
  56,596
  59,512
  62,570
  65,776
  69,138
  72,664
  76,363
  80,244
  84,315
  88,586
Working capital, $m
  -1,002
  -1,064
  -1,130
  -1,198
  -1,269
  -1,343
  -1,420
  -1,500
  -1,584
  -1,672
  -1,764
  -1,860
  -1,960
  -2,065
  -2,175
  -2,290
  -2,410
  -2,537
  -2,669
  -2,807
  -2,952
  -3,105
  -3,264
  -3,431
  -3,607
  -3,791
  -3,984
  -4,186
  -4,398
  -4,621
Total debt, $m
  10,486
  11,538
  12,633
  13,774
  14,963
  16,203
  17,497
  18,847
  20,257
  21,730
  23,270
  24,879
  26,562
  28,323
  30,166
  32,096
  34,116
  36,232
  38,449
  40,772
  43,207
  45,759
  48,435
  51,241
  54,183
  57,269
  60,506
  63,901
  67,464
  71,202
Total liabilities, $m
  16,805
  17,857
  18,952
  20,093
  21,282
  22,522
  23,816
  25,166
  26,576
  28,049
  29,589
  31,198
  32,881
  34,642
  36,485
  38,415
  40,435
  42,551
  44,768
  47,091
  49,526
  52,078
  54,754
  57,560
  60,502
  63,588
  66,825
  70,220
  73,783
  77,521
Total equity, $m
  6,406
  6,807
  7,225
  7,660
  8,113
  8,586
  9,079
  9,594
  10,131
  10,693
  11,280
  11,893
  12,535
  13,206
  13,909
  14,644
  15,415
  16,221
  17,066
  17,952
  18,880
  19,853
  20,873
  21,943
  23,064
  24,241
  25,475
  26,769
  28,127
  29,552
Total liabilities and equity, $m
  23,211
  24,664
  26,177
  27,753
  29,395
  31,108
  32,895
  34,760
  36,707
  38,742
  40,869
  43,091
  45,416
  47,848
  50,394
  53,059
  55,850
  58,772
  61,834
  65,043
  68,406
  71,931
  75,627
  79,503
  83,566
  87,829
  92,300
  96,989
  101,910
  107,073
Debt-to-equity ratio
  1.640
  1.690
  1.750
  1.800
  1.840
  1.890
  1.930
  1.960
  2.000
  2.030
  2.060
  2.090
  2.120
  2.140
  2.170
  2.190
  2.210
  2.230
  2.250
  2.270
  2.290
  2.300
  2.320
  2.340
  2.350
  2.360
  2.380
  2.390
  2.400
  2.410
Adjusted equity ratio
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276
  0.276

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,743
  1,960
  2,186
  2,423
  2,670
  2,930
  3,202
  3,487
  3,786
  4,099
  4,924
  5,270
  5,633
  6,014
  6,415
  6,836
  7,279
  7,744
  8,234
  8,748
  9,290
  9,860
  10,459
  11,089
  11,753
  12,451
  13,185
  13,958
  14,771
  15,627
Depreciation, amort., depletion, $m
  2,600
  2,720
  2,845
  2,976
  3,111
  3,253
  3,401
  3,555
  3,716
  3,885
  3,381
  3,565
  3,757
  3,959
  4,169
  4,390
  4,621
  4,863
  5,116
  5,381
  5,660
  5,951
  6,257
  6,578
  6,914
  7,266
  7,636
  8,024
  8,431
  8,859
Funds from operations, $m
  4,343
  4,680
  5,031
  5,398
  5,782
  6,183
  6,603
  7,042
  7,502
  7,984
  8,306
  8,835
  9,390
  9,973
  10,584
  11,226
  11,899
  12,607
  13,350
  14,130
  14,950
  15,811
  16,716
  17,667
  18,667
  19,717
  20,821
  21,982
  23,203
  24,485
Change in working capital, $m
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -160
  -167
  -175
  -184
  -193
  -202
  -212
  -223
Cash from operations, $m
  4,403
  4,743
  5,096
  5,466
  5,853
  6,257
  6,680
  7,123
  7,586
  8,072
  8,397
  8,931
  9,491
  10,078
  10,694
  11,341
  12,020
  12,733
  13,482
  14,268
  15,095
  15,963
  16,875
  17,834
  18,842
  19,901
  21,014
  22,185
  23,415
  24,708
Maintenance CAPEX, $m
  -1,805
  -1,920
  -2,041
  -2,166
  -2,296
  -2,432
  -2,574
  -2,722
  -2,876
  -3,037
  -3,205
  -3,381
  -3,565
  -3,757
  -3,959
  -4,169
  -4,390
  -4,621
  -4,863
  -5,116
  -5,381
  -5,660
  -5,951
  -6,257
  -6,578
  -6,914
  -7,266
  -7,636
  -8,024
  -8,431
New CAPEX, $m
  -1,149
  -1,202
  -1,252
  -1,304
  -1,359
  -1,417
  -1,478
  -1,543
  -1,611
  -1,683
  -1,759
  -1,839
  -1,924
  -2,012
  -2,106
  -2,205
  -2,309
  -2,418
  -2,533
  -2,655
  -2,782
  -2,916
  -3,058
  -3,206
  -3,362
  -3,526
  -3,699
  -3,880
  -4,071
  -4,271
Cash from investing activities, $m
  -2,954
  -3,122
  -3,293
  -3,470
  -3,655
  -3,849
  -4,052
  -4,265
  -4,487
  -4,720
  -4,964
  -5,220
  -5,489
  -5,769
  -6,065
  -6,374
  -6,699
  -7,039
  -7,396
  -7,771
  -8,163
  -8,576
  -9,009
  -9,463
  -9,940
  -10,440
  -10,965
  -11,516
  -12,095
  -12,702
Free cash flow, $m
  1,449
  1,620
  1,804
  1,997
  2,198
  2,408
  2,628
  2,858
  3,099
  3,352
  3,433
  3,711
  4,002
  4,308
  4,629
  4,967
  5,321
  5,694
  6,086
  6,498
  6,931
  7,387
  7,866
  8,371
  8,902
  9,461
  10,049
  10,668
  11,320
  12,005
Issuance/(repayment) of debt, $m
  995
  1,052
  1,095
  1,141
  1,189
  1,240
  1,294
  1,350
  1,410
  1,473
  1,539
  1,609
  1,683
  1,761
  1,843
  1,929
  2,020
  2,116
  2,217
  2,323
  2,435
  2,552
  2,676
  2,806
  2,942
  3,086
  3,237
  3,396
  3,562
  3,738
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  995
  1,052
  1,095
  1,141
  1,189
  1,240
  1,294
  1,350
  1,410
  1,473
  1,539
  1,609
  1,683
  1,761
  1,843
  1,929
  2,020
  2,116
  2,217
  2,323
  2,435
  2,552
  2,676
  2,806
  2,942
  3,086
  3,237
  3,396
  3,562
  3,738
Total cash flow (excl. dividends), $m
  2,443
  2,672
  2,900
  3,138
  3,387
  3,648
  3,922
  4,208
  4,509
  4,825
  4,972
  5,320
  5,685
  6,069
  6,472
  6,896
  7,342
  7,810
  8,303
  8,821
  9,366
  9,939
  10,542
  11,177
  11,844
  12,547
  13,286
  14,064
  14,882
  15,743
Retained Cash Flow (-), $m
  -387
  -401
  -418
  -435
  -453
  -473
  -493
  -515
  -538
  -562
  -587
  -614
  -642
  -671
  -703
  -736
  -770
  -807
  -845
  -886
  -928
  -973
  -1,020
  -1,070
  -1,122
  -1,176
  -1,234
  -1,294
  -1,358
  -1,425
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  101
  108
  115
  122
  129
  137
  145
  153
  162
  171
  180
  190
  200
  211
  222
  234
  247
  260
  273
  287
  302
  318
  334
  352
  370
  388
  408
  429
  451
  474
Cash available for distribution, $m
  2,056
  2,271
  2,482
  2,703
  2,934
  3,175
  3,428
  3,694
  3,972
  4,263
  4,386
  4,707
  5,044
  5,398
  5,770
  6,161
  6,571
  7,003
  7,458
  7,935
  8,438
  8,966
  9,522
  10,107
  10,723
  11,370
  12,052
  12,769
  13,524
  14,318
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  1,922
  1,971
  1,986
  1,979
  1,950
  1,900
  1,830
  1,742
  1,638
  1,521
  1,337
  1,212
  1,082
  951
  823
  701
  586
  481
  387
  305
  236
  178
  131
  94
  66
  45
  30
  19
  12
  7
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Waste Management, Inc. (WM) is a holding company. The Company, through its subsidiaries, is a provider of waste management environmental services. The Company's segments include Solid Waste and Other. The Company's Solid Waste segment includes its solid waste business. The Other segment includes its Strategic Business Solutions (WMSBS) organization; its landfill gas-to-energy operations and third-party subcontract and administration services managed by its Energy and Environmental Services and WM Renewable Energy organizations; its recycling brokerage services, and its service offerings and solutions, such as portable self-storage and long distance moving services, fluorescent lamp recycling and interests it holds in oil and gas producing properties. As of December 31, 2016, the Company owned or operated 243 solid waste landfills and five secure hazardous waste landfills. Its recycling brokerage services involve managing the marketing of recyclable materials for third parties.

FINANCIAL RATIOS  of  Waste Management (WM)

Valuation Ratios
P/E Ratio 33.5
Price to Sales 2.9
Price to Book 7.5
Price to Tangible Book
Price to Cash Flow 13.4
Price to Free Cash Flow 24.4
Growth Rates
Sales Growth Rate 5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 8.6%
Cap. Spend. - 3 Yr. Gr. Rate 1%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 167.9%
Total Debt to Equity 175.8%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.9%
Ret/ On Assets - 3 Yr. Avg. 6.5%
Return On Total Capital 8.2%
Ret/ On T. Cap. - 3 Yr. Avg. 7.2%
Return On Equity 22.2%
Return On Equity - 3 Yr. Avg. 19.4%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 45.6%
Gross Margin - 3 Yr. Avg. 44.7%
EBITDA Margin 25.7%
EBITDA Margin - 3 Yr. Avg. 23.8%
Operating Margin 16.8%
Oper. Margin - 3 Yr. Avg. 14.9%
Pre-Tax Margin 13.4%
Pre-Tax Margin - 3 Yr. Avg. 11.4%
Net Profit Margin 8.7%
Net Profit Margin - 3 Yr. Avg. 7.9%
Effective Tax Rate 35.2%
Eff/ Tax Rate - 3 Yr. Avg. 29.3%
Payout Ratio 61.4%

WM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WM stock intrinsic value calculation we used $14485 million for the last fiscal year's total revenue generated by Waste Management. The default revenue input number comes from 2017 income statement of Waste Management. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our WM stock valuation model: a) initial revenue growth rate of 6.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7%, whose default value for WM is calculated based on our internal credit rating of Waste Management, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Waste Management.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of WM stock the variable cost ratio is equal to 61.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3056 million in the base year in the intrinsic value calculation for WM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Waste Management.

Corporate tax rate of 27% is the nominal tax rate for Waste Management. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the WM stock is equal to 0.7%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for WM are equal to 124.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Waste Management operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for WM is equal to -6.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6019 million for Waste Management - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 434 million for Waste Management is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Waste Management at the current share price and the inputted number of shares is $39.1 billion.

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COMPANY NEWS

▶ 4 Key Takeaways From Waste Management's Earnings Call   [Aug-15-18 07:19AM  Motley Fool]
▶ Why Waste Management, Inc.'s Shares Popped 7% Today   [Jul-25-18 03:59PM  Motley Fool]
▶ Waste Management: 2Q Earnings Snapshot   [07:23AM  Associated Press]
▶ 7 S&P 500 Companies Whose Debt Scares Me   [Jul-06-18 01:30PM  InvestorPlace]
▶ Waste Management makes a power play with $30M Louisville project   [12:49PM  American City Business Journals]
▶ 3 Dividend Stocks for In-the-Know Investors   [Jun-04-18 08:46PM  Motley Fool]
▶ 4 Great Stocks You Can Buy and Hold Forever   [May-30-18 09:20AM  Motley Fool]
▶ Waste Management Is Looking Vulnerable to Further Declines   [May-23-18 10:18AM  TheStreet.com]
▶ Waste Management names new board chairman   [May-18-18 12:40PM  American City Business Journals]
▶ Waste Management Announces Cash Dividend   [May-14-18 05:48PM  Business Wire]
▶ Why Waste Management Inc (NYSE:WM) Is A Top Dividend Stocks   [May-09-18 04:35PM  Simply Wall St.]
▶ 3 Stocks for Retirees to Grow Their Nest Eggs   [May-02-18 10:35AM  Motley Fool]
▶ China 'Tired' of Importing U.S. Trash: Waste Management CEO   [Apr-27-18 05:00PM  Bloomberg Video]
▶ Waste Management: 1Q Earnings Snapshot   [07:19AM  Associated Press]
▶ Waste Management chairman resigns following political donation revelation   [Apr-11-18 01:22PM  American City Business Journals]
▶ Gabelli & Companys Annual Waste Conference   [Mar-21-18 12:58PM  Business Wire]
▶ Top Ranked Momentum Stocks to Buy for March 9th   [Mar-09-18 06:27AM  Zacks]
▶ Gabelli & Companys Annual Waste Conference   [Mar-07-18 07:30AM  Business Wire]
▶ 3 Stocks to Buy and Hold for Decades   [Mar-03-18 08:35AM  Motley Fool]
▶ [$$] Big Buys in GM, Sirius, Waste Management   [Feb-23-18 08:04AM  Barrons.com]
▶ Waste Management Announces Cash Dividend   [Feb-19-18 05:56PM  Business Wire]
▶ Company News For Feb 16, 2018   [09:53AM  Zacks]
▶ Waste Management beats Street 4Q forecasts   [07:29AM  Associated Press]
▶ Waste Management halts service in Houston, elsewhere due to bad weather   [Jan-16-18 05:30PM  American City Business Journals]
▶ Waste Management to give employees bonus, citing tax reform   [Jan-11-18 04:15PM  American City Business Journals]
▶ 5 Top ROE Picks as Equity Markets Begin 2018 With a Bang   [Jan-08-18 11:25AM  InvestorPlace]
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