Digging Through the Trash for Income Opportunities: Waste Management, Inc. (WM)

Page 2 of 2

Finally, of the three main waste management companies in the US, WM appears to be the cheapest at the moment looking at TTM P/E. The company trades at 19.55x earnings, compared to Republic’s 20.08x  and smaller competitor Waste Connections, Inc. (NYSE:WCN)’ rather pricey 26.5x. WM is also cheapest looking at price to sales at 1.24; Waste Connections is again the more expensive play at 2.67. WM has an operating margin of around 15%, and a decent return on equity of 14%.

Bottom Line

I tend to favor low-beta companies that offer essential goods and services and Waste Management is a prime example of one of these stocks, and through its green energy and recycling projects is even helping the world along a bit. The stock offers an enticing dividend yield, increased stability and decent earnings growth potential. As for valuations, the stock looks cheaper than that of its peers, and seems to be trading more or less at fair value.

The article Digging Through the Trash for Income Opportunities originally appeared on Fool.com and is written by Daniel James.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2