Analysis of Profitability Ratios
Quarterly Data
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Debt to Equity since 2005
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Profitability Ratios (Summary)
Waste Management Inc., profitability ratios (quarterly data)
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
The analysis of the quarterly financial data reveals consistent trends with some volatility observed across key profitability and return metrics over the examined periods.
- Gross Profit Margin
- The gross profit margin demonstrates a generally stable and slightly upward trend, ranging from approximately 37.72% in early 2017 to a peak near 38.95% in late 2020. Thereafter, it experiences minor fluctuations, ending close to 38.03% by the end of 2021. This suggests ongoing efficiency in managing the cost of goods sold relative to sales revenue.
- Operating Profit Margin
- The operating profit margin starts near 18.2% in early 2017 and shows modest growth during the first half of the timeline, reaching a high of approximately 18.7% in early 2019. From 2019 onwards, a noticeable decline occurs, bottoming out at roughly 15.99% in early 2021, followed by a slight recovery to around 16.54% by the end of 2021. This pattern indicates that operating expenses relative to revenue increased during the latter periods, potentially due to rising costs or margin pressure.
- Net Profit Margin
- The net profit margin peaked in late 2017 at approximately 15.6%, a notable value relative to other periods. However, from 2018 onwards, the margin displayed a downward trajectory, falling below 10% in early 2020 and stabilizing around 10% through the end of 2021. This decline implies that beyond operating costs, factors such as interest expenses, taxes, or other non-operating costs may have negatively impacted overall profitability.
- Return on Equity (ROE)
- ROE shows a strong performance early on, with figures reaching above 36% by the end of 2017, indicative of efficient use of shareholder capital. Nonetheless, a pronounced decrease follows, dipping to about 20% in early 2021. The latter months show slight improvement, trending upwards near 25.5% by the end of 2021. The initial high ROE alongside later declines suggests changing dynamics in equity efficiency, possibly due to changes in net income or equity balance.
- Return on Assets (ROA)
- ROA parallels the trend of other returns, peaking at just over 10% near the end of 2017, then declining to roughly 5.1% by early 2021. The final quarters reflect a mild recovery, rising to about 6.24% by late 2021. This decline indicates a reduced ability to generate profits from asset base, possibly linked to operational challenges or asset growth outpacing net income.
Overall, the data reflects a strong performance phase around late 2017, followed by a gradual erosion in profitability and returns over subsequent years, with some signs of stabilization or slight improvement towards the end of 2021. The gross profit margin's relative stability contrasts with the downward trends in net profit margin, operating margin, ROE, and ROA, suggesting increased costs, financial expenses, or other factors impacting bottom-line efficiency and return metrics.
Return on Sales
Return on Investment
Gross Profit Margin
Waste Management Inc., gross profit margin calculation (quarterly data)
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Gross profit margin = 100
× (Gross profitQ4 2021
+ Gross profitQ3 2021
+ Gross profitQ2 2021
+ Gross profitQ1 2021)
÷ (Operating revenuesQ4 2021
+ Operating revenuesQ3 2021
+ Operating revenuesQ2 2021
+ Operating revenuesQ1 2021)
= 100 × ( + + + )
÷ ( + + + )
=
The quarterly financial data reveals several noteworthy trends in the company's performance over the analyzed periods.
- Operating Revenues
- Operating revenues exhibit a generally upward trajectory from March 2017 to December 2021, increasing from approximately 3,440 million USD to 4,678 million USD. There are occasional fluctuations, notably a dip around the first half of 2020, which corresponds with broader economic challenges during that period. Following this decline, revenues recovered and surpassed previous levels by the end of 2021, indicating resilience and growth capability.
- Gross Profit
- Gross profit has shown a consistent increase overall, starting near 1,274 million USD in March 2017 and rising to around 1,723 million USD by December 2021. Similar to operating revenues, there is a noticeable dip in the first half of 2020; however, gross profit rebounded in subsequent quarters, achieving new highs by 2021. This trend signals effective cost management and sustained demand.
- Gross Profit Margin
- The gross profit margin remains relatively stable throughout the observed periods, hovering around 38%. Minor variations occur, with margins peaking near 38.95% in late 2020 and gradually normalizing to approximately 38.03% by the end of 2021. The steadiness of this ratio suggests consistent pricing strategies and controlled production or service costs relative to revenues.
In summary, the data indicates that the company has demonstrated steady revenue growth and gross profit enhancement over the observed period, except for a brief downturn around 2020. The gross profit margin’s stability reinforces the conclusion that profitability relative to sales has been maintained, reflecting operational efficiency and market stability. The recovery after the 2020 contraction and subsequent surpassing of prior financial benchmarks highlight the company’s resilience and financial health progression.
Operating Profit Margin
Waste Management Inc., operating profit margin calculation (quarterly data)
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Operating profit margin = 100
× (Income from operationsQ4 2021
+ Income from operationsQ3 2021
+ Income from operationsQ2 2021
+ Income from operationsQ1 2021)
÷ (Operating revenuesQ4 2021
+ Operating revenuesQ3 2021
+ Operating revenuesQ2 2021
+ Operating revenuesQ1 2021)
= 100 × ( + + + )
÷ ( + + + )
=
Over the analyzed periods, the income from operations exhibited fluctuations with some notable trends. Initially, from March 2017 through December 2017, there is a general upward movement, climbing from 558 million US dollars to 704 million US dollars. This upward trend continues into mid-2018, peaking at 767 million US dollars in December 2018. However, from 2019 onwards, income from operations shows a decline, particularly noticeable in the first half of 2020, where it reaches a low of 527 million US dollars in June 2020. Recovery begins thereafter, with values gradually increasing to reach 806 million US dollars by September 2021 before a slight decrease towards the end of the year.
Operating revenues demonstrate a generally increasing trend across the entire timeframe. Starting at 3440 million US dollars in March 2017, revenues increase steadily with some variability, surging past 4000 million US dollars in 2020 and peaking at 4678 million US dollars in December 2021. Even amid the dip in income from operations noted in 2020, operational revenues hovered around mid to high 3000 million US dollars, demonstrating resilience in top-line performance.
Regarding operating profit margin, data availability begins from March 2018. The operating profit margin remains relatively stable around the 18% level through 2018 and 2019, suggesting consistent operational efficiency during this period. However, a gradual decline is observed starting in 2020, dropping to as low as 15.99% in the first quarter of 2021. Although there is a moderate recovery afterwards, the margin does not return to prior levels, ending at approximately 16.54% by December 2021. This trend indicates pressure on profitability despite growing revenues, potentially reflecting increased costs or changing operational dynamics.
- Summary of Trends
- Income from operations shows growth from 2017 to late 2018, followed by a decline through mid-2020 and partial recovery through the end of 2021.
- Operating revenues consistently grow over the period, surpassing 4600 million US dollars by late 2021.
- Operating profit margin remains stable near 18% until 2019, then declines to around 16% in 2020 and 2021, indicating reduced profitability levels relative to revenue.
The data collectively suggest robust revenue growth, tempered by declining profit margins which imply increasing operational costs or other margin pressures affecting net profitability despite revenue expansion.
Net Profit Margin
Waste Management Inc., net profit margin calculation (quarterly data)
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Net profit margin = 100
× (Net income attributable to Waste Management, Inc.Q4 2021
+ Net income attributable to Waste Management, Inc.Q3 2021
+ Net income attributable to Waste Management, Inc.Q2 2021
+ Net income attributable to Waste Management, Inc.Q1 2021)
÷ (Operating revenuesQ4 2021
+ Operating revenuesQ3 2021
+ Operating revenuesQ2 2021
+ Operating revenuesQ1 2021)
= 100 × ( + + + )
÷ ( + + + )
=
- Net Income Attributable to Waste Management, Inc.
- The net income exhibits notable fluctuations across the observed periods. Starting at 298 million US dollars in the first quarter of 2017, it generally trends upward through 2017, peaking at 903 million in the final quarter of that year. Subsequently, net income stabilizes around the 400-500 million range for much of 2018 and 2019, with periodic moderate declines. A dip in net income is observed during 2020, with values falling to as low as 307 million in the second quarter, potentially reflecting external pressures. Recovery is evident in 2021, where net income again rises above 500 million in the first and last quarters, indicating renewed strength.
- Operating Revenues
- Operating revenues demonstrate a generally consistent upward trajectory over the examined period. Beginning at 3440 million US dollars in the first quarter of 2017, revenues rise steadily through 2017 and 2018, reaching near 3842 million by the end of 2018. Despite a slight decline in early 2020 to approximately 3561 million, revenues rebound strongly thereafter. The final quarters of 2021 mark the highest revenue figures in the series, exceeding 4600 million US dollars, suggesting effective growth and possible expansion in operations.
- Net Profit Margin
- The net profit margin data is partial, available only from March 31, 2018, onwards. It begins at 13.46% in early 2018 and shows a marginal increase over the next three quarters, reaching 15.6% at the end of 2018. Following this peak, a downward trend occurs, with margins generally declining through 2019 and into 2020, dipping below 10% in some quarters. Margins stabilize around 10% to just above that level by the end of 2021, reflecting a compression in profitability compared to the 2018 highs, despite rising revenues.
- Overall Analysis
- The data reflect a company experiencing growth in operating revenues over the four-year period, notwithstanding some volatility likely related to external market or economic conditions. Net income fluctuates more significantly with marked peaks and troughs, particularly a sharp peak in late 2017 and a dip in 2020, which may correspond with broader economic disruptions. Profit margins peaked in 2018 but have since contracted and stabilized at lower levels, signaling potential pressures on cost management or pricing strategies despite revenue growth. The recovery in net income and revenue by 2021 suggests resilience and adaptability, although profit margins continue to reflect tighter profitability conditions.
Return on Equity (ROE)
Waste Management Inc., ROE calculation (quarterly data)
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
ROE = 100
× (Net income attributable to Waste Management, Inc.Q4 2021
+ Net income attributable to Waste Management, Inc.Q3 2021
+ Net income attributable to Waste Management, Inc.Q2 2021
+ Net income attributable to Waste Management, Inc.Q1 2021)
÷ Total Waste Management, Inc. stockholders’ equity
= 100 × ( + + + )
÷ =
The financial data exhibits several notable trends over the periods under review. Net income attributable to the company experienced fluctuations. Starting at $298 million in the first quarter of 2017, it peaked significantly at $903 million in the final quarter of 2017. Following that spike, net income showed variability but remained within a narrower range from 2018 through 2021, oscillating generally between $300 million and $540 million. This pattern suggests a one-time event or seasonal effect in late 2017 that temporarily boosted earnings, with more stable, moderate earnings in subsequent quarters.
Regarding total stockholders’ equity, the data indicates a steady upward trajectory from approximately $5.5 billion at the beginning of 2017 to a peak of around $7.5 billion by the end of 2020. There is a slight decline in the subsequent quarters of 2021, finishing close to $7.1 billion. This trend reflects overall growth in the company’s net assets over the analyzed period, albeit with some minor contraction in the most recent quarters noted.
The return on equity (ROE) percentages were available starting only from the first quarter of 2018. Initially, ROE was relatively high, reaching nearly 37% in the third and fourth quarters of 2018. Following this peak, a consistent decline is observed over the four-year span, with ROE dropping to approximately 20-25% range in 2020 and 2021. This progressive decrease in ROE suggests diminishing effectiveness in generating profit from equity, potentially due to increasing equity base without proportionate growth in net income or changing business conditions.
- Summary of key financial insights:
- Net income showed a significant peak in late 2017 followed by stabilization at lower levels.
- Stockholders’ equity progressively increased from 2017 through 2020, indicating asset growth, with a slight decrease in 2021.
- ROE was high in early periods but demonstrated a clear downward trend, implying reduced profitability efficiency relative to equity.
Return on Assets (ROA)
Waste Management Inc., ROA calculation (quarterly data)
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
ROA = 100
× (Net income attributable to Waste Management, Inc.Q4 2021
+ Net income attributable to Waste Management, Inc.Q3 2021
+ Net income attributable to Waste Management, Inc.Q2 2021
+ Net income attributable to Waste Management, Inc.Q1 2021)
÷ Total assets
= 100 × ( + + + )
÷ =
- Net Income Attributable to the Company
- The net income figures demonstrate noticeable variability across the quarters from March 2017 through December 2021. Initially, the income ranges between 298 to 903 million USD from early 2017 to the end of 2017 with a significant peak at 903 million USD in December 2017. Post this period, the net income oscillates mostly between approximately 347 and 538 million USD, with some quarters exhibiting moderate decreases, such as the dip to 307 million USD in June 2020. There is an apparent recovery and increase towards the end of the dataset, reaching values above 500 million USD in some recent quarters.
- Total Assets
- Total assets display an overall upward trajectory from 20,650 million USD in March 2017 to approximately 29,097 million USD by December 2021. The growth is generally steady with occasional fluctuations, including a slight reduction observed around mid-2020—dropping from 27,178 million USD in March 2020 to 24,772 million USD in September 2020—before rising again in subsequent quarters. This pattern suggests some asset revaluations or possible divestitures in that interval followed by increased asset accumulation or acquisitions.
- Return on Assets (ROA)
- ROA data is partially missing for early periods but shows a clear trend from March 2018 onward. It peaked notably at 10.17% in December 2017 and remains relatively high through mid-2018, demonstrating effective utilization of assets in generating income. However, a declining trend emerges starting in late 2018, falling to near 5.1% by the end of 2020. Slight improvements are seen thereafter, reaching above 6% by the end of 2021, suggesting a partial recovery in asset efficiency but not returning to earlier peak levels.
- Summary of Observed Patterns
- The financial data reveals fluctuating profitability with periods of strong performance followed by contractions, possibly influenced by broader economic conditions or internal adjustments. Asset growth is robust overall but punctuated by a notable dip around mid-2020, possibly reflecting strategic shifts or economic stress. The ROA trend corroborates these observations, indicating a period of optimal asset utilization early on, a decline during challenging periods, and signs of recovery towards the latest quarters.