Is Waste Management, Inc. (NYSE:WM) a Hidden Gem in the Waste Management Industry?

As an investor, it's crucial to stay informed about the companies you're interested in and make well-informed decisions. One such company that has caught my attention is Waste Management, Inc. (NYSE:WM), a leading provider of environmental solutions in the United States and Canada. In this article, we'll explore whether WM is a hidden gem in the waste management industry and if investors are undervaluing it by 38%.

Waste Management, Inc. (WM) is a well-established company with a strong track record of financial performance. As of December 31, 2022, WM owned or operated 254 solid waste landfills, five secure hazardous waste landfills, 97 material recovery facilities (MRFs), and 337 transfer stations. The company also offers a wide range of services, including materials processing and commodities recycling, recycling brokerage services, and specialized disposal services for oil and gas exploration and production operations.



One of the key factors to consider when evaluating a company is its earnings growth rate. WM's earnings growth rate over the past year was 2.87%, which underperformed the average growth rate of its industry peers. However, it's essential to note that the company's earnings growth rate over the past five years has been positive, indicating a consistent performance in terms of earnings growth.

Another crucial aspect to consider is the company's debt-to-equity ratio, which provides insight into its financial health and ability to cover its debt obligations. WM has a debt-to-equity ratio of 0.37, which is lower than the industry average of 0.45. This indicates that WM has a lower level of debt relative to its equity compared to its peers in the waste management industry. Additionally, WM's interest coverage ratio is 11.55, which is higher than the industry average of 7.25. This suggests that WM has a strong capacity to cover its interest expenses and meet its debt obligations.

Waste Management's dividend history and growth potential are significant contributors to its intrinsic value. The company has a strong track record of increasing its dividend rate for more than 15 years, with a compound annual growth rate of approximately 6% over the last 5 years. This consistent dividend growth demonstrates the company's commitment to returning value to shareholders and its financial strength.

Analysts' recommendations and price targets also play a significant role in the perceived undervaluation of Waste Management. As of the given information, 20 analysts have provided their opinions on WM, with a majority (11) recommending a "buy" rating, while 9 analysts have a "hold" rating. Only 1 analyst has a "sell" rating, indicating a generally positive outlook on the company's stock. The average price target among these analysts is $225.79, which is significantly higher than the current stock price of $201.79. This discrepancy suggests that analysts, on average, believe that WM is undervalued at its current price.

In conclusion, Waste Management, Inc. (NYSE:WM) is a well-established company with a strong track record of financial performance and a solid dividend history. While its earnings growth rate over the past year underperformed its industry peers, the company's consistent earnings growth over the past five years and its strong financial health indicate that it is well-positioned for future growth. Analysts' recommendations and price targets also suggest that WM is undervalued at its current price. As an investor, it's essential to stay informed about the companies you're interested in and make well-informed decisions. Waste Management, Inc. (NYSE:WM) may be a hidden gem in the waste management industry, and investors should consider adding it to their watchlist.