Price to FCFE (P/FCFE)
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Free Cash Flow to Equity (FCFE)
Waste Management Inc., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Net cash provided by operating activities
- The net cash provided by operating activities exhibited a generally increasing trend from 2017 to 2021, rising from $3,180 million in 2017 to a peak of $4,338 million in 2021. There was a consistent increase from 2017 through 2019, reaching $3,874 million. This was followed by a decline in 2020 to $3,403 million, likely reflecting operational or economic challenges during that period. However, the cash flow rebounded substantially in 2021, surpassing prior year levels to reach $4,338 million.
- Free cash flow to equity (FCFE)
- Free cash flow to equity showed significant volatility over the five-year period. The FCFE grew markedly from $1,296 million in 2017 to $5,121 million in 2019, indicating a strong improvement in cash available to equity holders during this time. However, the figure dropped sharply in 2020 to $1,532 million, reflecting a substantial reduction that might correspond to changes in capital expenditures, working capital, or financing activities. In 2021, FCFE slightly improved to $1,767 million but remained well below the 2019 peak.
- Overall Cash Flow Analysis
- The operating cash flow trend suggests effective operational performance with resilience after a downturn in 2020. The sharp increase in FCFE in 2019 followed by a steep decline in 2020 and partial recovery in 2021 indicates more fluctuation and potential variability in cash available to equity investors. This divergence may point to changes in investment strategy, capital expenditure, or debt servicing during those years.
Price to FCFE Ratio, Current
Waste Management Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | |
| FCFE per share | |
| Current share price (P) | |
| Valuation Ratio | |
| P/FCFE | |
| Benchmarks | |
Based on: 10-K (reporting date: 2021-12-31).
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Waste Management Inc., historical P/FCFE calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
3 2021 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= ÷ =
4 Closing price as at the filing date of Waste Management Inc. Annual Report.
5 2021 Calculation
P/FCFE = Share price ÷ FCFE per share
= ÷ =
- Share Price Trend
- The share price exhibits a generally upward trajectory over the five-year period. Starting from $84.02 at the end of 2017, it increased steadily to $98.84 in 2018 and further to $124.23 in 2019. Despite a decline in 2020 to $110.56, the share price rebounded strongly in 2021, reaching $142.68. This overall increase indicates growing market confidence or expectations for the company during this timeframe.
- Free Cash Flow to Equity (FCFE) per Share Trend
- FCFE per share saw significant fluctuations throughout the period. It rose sharply from $2.99 in 2017 to $5.17 in 2018, then nearly doubled again to reach $12.06 in 2019. However, this was followed by a pronounced decline to $3.62 in 2020, and a modest recovery to $4.26 in 2021. Such volatility suggests variability in the company's cash generation available to shareholders, potentially due to operational or investment factors.
- Price to FCFE (P/FCFE) Ratio Trend
- The P/FCFE ratio declined significantly from 28.12 in 2017 to 10.3 in 2019, indicating that the market price became more attractive relative to free cash flow generation during this period. This aligns with the rise in FCFE per share outpacing the increase in share price. However, in 2020 and 2021, the ratio reversed course sharply, increasing to 30.54 and 33.48 respectively. This suggests that while share prices remained relatively high, FCFE per share declined or improved less rapidly, resulting in a higher valuation multiple.
- Overall Insights
- In summary, while the share price of the company generally increased over the period, the FCFE per share showed considerable volatility with a peak in 2019 followed by a substantial drop. The combined effect of these dynamics is reflected in the P/FCFE ratio, which initially trended downward, signaling improving cash flow value relative to price, but then increased markedly in the last two years. This could imply that investor expectations or market sentiment remained optimistic despite the declining free cash flow generation in 2020 and 2021, potentially expecting future improvements or valuing other aspects of the company's performance.