Shares of Waste Management (WM, Financial) are experiencing a decline of 3.63%, even as the broader market is buoyed by optimism surrounding a potential trade deal between the U.S. and China. Despite the S&P 500 rally, Waste Management's stock price is trending downwards, standing at $224.29. This movement reflects a shift in investor interest towards high-beta stocks, with low-volatility stocks like Waste Management receiving less attention during bullish market sentiment.
Waste Management Inc (WM, Financial) operates as the largest integrated provider of traditional solid waste services in the United States, with a notable presence in landfill operations, recycling, and resource recovery. With a market capitalization of $90.26 billion, WM's financial metrics present a mixed picture. The company demonstrates a strong operating margin of 18.16% and a net margin of 11.67%, indicating efficient management and profitability.
WM's valuation ratios suggest that it is currently priced on the higher side. The price-to-earnings (PE) ratio is 33.83, close to its three-year high, suggesting that the stock might be overvalued according to historical standards. Furthermore, the price-to-book (PB) ratio of 10.43 and the price-to-sales (PS) ratio of 3.94 are near their ten-year highs, reinforcing the notion of its premium valuation.
In terms of financial strength, WM's Altman Z-score of 2.87 places it in the "grey" area, indicating some financial stress but not imminent bankruptcy risk. The company has been issuing new debt, which is acceptable given its current leverage levels, but bears watching for future financial health.
Waste Management's GF Value suggests the stock is Fairly Valued, with a GF Value estimate of $232.56. This aligns closely with its current market price, suggesting limited potential for upside based on intrinsic value calculations.
Looking forward, investors may find the company's consistent revenue growth, with a 10.8% increase in the past year, appealing. However, the pressure on traditional stable stocks in favor of more volatile investments may continue to impact Waste Management's stock performance in the near term.
