Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
Waste Management Inc., current price multiples
| Waste Management Inc. | Industrials | ||
|---|---|---|---|
| Selected Financial Data | |||
| Current share price (P) | $142.68 | ||
| No. shares of common stock outstanding | 414,586,718 | ||
| Growth rate (g) | 13.32% | ||
| Earnings per share (EPS) | $4.38 | ||
| Next year expected EPS | $4.96 | ||
| Operating profit per share | $7.15 | ||
| Sales per share | $43.25 | ||
| Book value per share (BVPS) | $17.18 | ||
| Valuation Ratios (Price Multiples) | |||
| Price to earnings (P/E) | 32.57 | 48.47 | |
| Price to next year expected earnings | 28.74 | 46.81 | |
| Price-earnings-growth (PEG) | 2.45 | 13.70 | |
| Price to operating profit (P/OP) | 19.95 | 30.48 | |
| Price to sales (P/S) | 3.30 | 2.82 | |
| Price to book value (P/BV) | 8.30 | 7.40 | |
Based on: 10-K (reporting date: 2021-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Waste Management Inc., historical price multiples
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).
- Price to Earnings (P/E) Ratio
- The P/E ratio demonstrated a consistent upward trend over the analyzed period. Starting at 18.7 in 2017, it increased to 21.76 in 2018, followed by a more significant rise to 31.59 in 2019. The ratio remained relatively stable thereafter, with a minor decrease to 31.27 in 2020, before climbing slightly to 32.57 in 2021. This pattern suggests growing investor expectations of earnings growth or potentially higher valuation multiples during these years.
- Price to Operating Profit (P/OP) Ratio
- This ratio also showed an increasing trend from 13.82 in 2017 to 15.02 in 2018, and then a marked rise to 19.5 in 2019. There was a slight dip to 19.22 in 2020, followed by a rebound to 19.95 in 2021. The pattern closely mirrors that of the P/E ratio, indicating that market valuation relative to operating profitability heightened significantly between 2017 and 2019 and has since remained near those peak values.
- Price to Sales (P/S) Ratio
- The P/S ratio experienced growth from 2.52 in 2017 to 2.81 in 2018 and further to 3.41 in 2019. However, unlike the P/E and P/OP ratios, it declined in 2020 to 3.07 before edging up again to 3.3 in 2021. This fluctuation suggests some variability in the market's valuation of sales relative to price, with a dip in 2020 that may reflect broader market or sector-specific pressures amid that period.
- Price to Book Value (P/BV) Ratio
- The P/BV ratio showed moderate growth from 6.05 in 2017 to 6.68 in 2018, continuing to rise to 7.46 in 2019. However, it declined more noticeably to 6.28 in 2020 before increasing significantly to its highest level of 8.3 in 2021. This indicates that while the market valuation relative to the company's book value dropped in 2020, it rebounded strongly the following year, surpassing previous highs.
- Summary of Observations
- Overall, the valuation ratios reveal an increasing market optimism over the five-year span. The sharp increases in P/E and P/OP ratios up to 2019 suggest strong investor confidence in earnings and operating profitability growth. The dip in 2020 across most valuation measures corresponds with a temporary market adjustment, followed by a recovery or further increase in 2021, particularly evident in the P/BV ratio. The P/S ratio's moderate fluctuation indicates a slightly less consistent valuation relative to sales. These trends may reflect broader economic conditions impacting the sector and company-specific performance factors.
Price to Earnings (P/E)
Waste Management Inc., historical P/E 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.
2 2021 Calculation
EPS = Net income attributable to Waste Management, Inc. ÷ No. shares of common stock outstanding
= 1,816,000,000 ÷ 414,586,718 = 4.38
3 Closing price as at the filing date of Waste Management Inc. Annual Report.
4 2021 Calculation
P/E ratio = Share price ÷ EPS
= 142.68 ÷ 4.38 = 32.57
- Share Price
- The share price exhibited an overall increasing trend from 2017 to 2021. Starting at $84.02 in 2017, it rose steadily to $98.84 in 2018 and further to $124.23 in 2019. There was a slight decrease in 2020 to $110.56, possibly reflecting market uncertainty or company-specific challenges during that year, but it rebounded strongly in 2021 to reach the highest value of $142.68.
- Earnings per Share (EPS)
- The EPS showed some volatility over the period. Beginning at $4.49 in 2017, the figure remained relatively stable at $4.54 in 2018 before declining to $3.93 in 2019 and further to $3.54 in 2020. In 2021, EPS recovered to $4.38, though it still did not reach the peak levels of 2017 and 2018. This suggests challenges in profitability or earnings generation during 2019 and 2020, followed by a partial recovery.
- Price-to-Earnings (P/E) Ratio
- The P/E ratio indicates increasing valuation multiples over the years. From a moderate 18.7 in 2017, it grew significantly to 21.76 in 2018, surged to over 31 in both 2019 and 2020, and slightly increased further to 32.57 in 2021. The rising P/E ratio, despite the dip in EPS in 2019 and 2020, suggests strong investor confidence and possibly expectations of future earnings growth or other favorable outlook factors.
Price to Operating Profit (P/OP)
Waste Management Inc., historical P/OP 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.
2 2021 Calculation
Operating profit per share = Income from operations ÷ No. shares of common stock outstanding
= 2,965,000,000 ÷ 414,586,718 = 7.15
3 Closing price as at the filing date of Waste Management Inc. Annual Report.
4 2021 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 142.68 ÷ 7.15 = 19.95
- Share Price
- The share price demonstrated an overall upward trend during the period from 2017 to 2021. Starting at 84.02 US dollars in 2017, it increased steadily each year, with a notable peak at 124.23 US dollars in 2019, followed by a slight decline to 110.56 US dollars in 2020, and then a substantial rise to 142.68 US dollars in 2021. This indicates a strong market valuation growth particularly in the latter year.
- Operating Profit Per Share
- The operating profit per share showed moderate fluctuations over these years. It rose from 6.08 US dollars in 2017 to a peak of 6.58 US dollars in 2018, then slightly declined to 6.37 US dollars in 2019. A more significant decrease was observed in 2020, dropping to 5.75 US dollars, before recovering to 7.15 US dollars in 2021, which is the highest level within the timeframe. These movements suggest some variability in operational profitability, with a recovery in the later period.
- Price-to-Operating-Profit (P/OP) Ratio
- The P/OP ratio increased consistently across the period, from 13.82 in 2017 to a peak of 19.95 in 2021. The ratio rose steadily each year, with a particularly noticeable jump between 2018 and 2019, leveling slightly in 2020, and then increasing again in 2021. This progression indicates that the market valuation relative to operating profit per share has increased, implying investors are willing to pay more per unit of operating profit, which may be due to expectations of future growth or other positive market sentiments.
Price to Sales (P/S)
Waste Management Inc., historical P/S 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.
2 2021 Calculation
Sales per share = Operating revenues ÷ No. shares of common stock outstanding
= 17,931,000,000 ÷ 414,586,718 = 43.25
3 Closing price as at the filing date of Waste Management Inc. Annual Report.
4 2021 Calculation
P/S ratio = Share price ÷ Sales per share
= 142.68 ÷ 43.25 = 3.30
- Share Price
- The share price exhibited an overall upward trend over the five-year period. Starting at $84.02 at the end of 2017, it increased steadily to reach $124.23 by the end of 2019. Although there was a decline in 2020 to $110.56, the share price recovered and reached a peak of $142.68 by the end of 2021.
- Sales per Share
- Sales per share showed a moderate growth trend with some fluctuations. From $33.40 at the end of 2017, sales per share increased each year until 2019, reaching $36.39. There was a slight decline in 2020 to $35.96, followed by a notable increase to $43.25 in 2021, which represents a significant leap compared to previous years.
- Price-to-Sales (P/S) Ratio
- The price-to-sales ratio followed a pattern of growth with some volatility. It rose from 2.52 in 2017 to a peak of 3.41 in 2019, reflecting increased investor expectations or improved valuation relative to sales. The ratio decreased in 2020 to 3.07, likely mirroring the dip in share price and sales per share, before recovering to 3.3 in 2021, indicating renewed market confidence.
Price to Book Value (P/BV)
Waste Management Inc., historical P/BV 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.
2 2021 Calculation
BVPS = Total Waste Management, Inc. stockholders’ equity ÷ No. shares of common stock outstanding
= 7,124,000,000 ÷ 414,586,718 = 17.18
3 Closing price as at the filing date of Waste Management Inc. Annual Report.
4 2021 Calculation
P/BV ratio = Share price ÷ BVPS
= 142.68 ÷ 17.18 = 8.30
- Share Price Trends
- The share price exhibited a general upward trajectory over the five-year period. Starting at $84.02 in 2017, it increased steadily, reaching a peak of $124.23 in 2019. A slight decline occurred in 2020, bringing the price down to $110.56, followed by a strong recovery in 2021 to its highest level of $142.68. This pattern suggests overall market confidence with a temporary setback in 2020, possibly related to broader market conditions.
- Book Value per Share (BVPS) Trends
- The book value per share showed a consistent increase from 2017 through 2020, rising from $13.88 to $17.61. However, in 2021, a slight decrease was observed, with the BVPS falling marginally to $17.18. This indicates steady growth in the underlying equity value until 2020, followed by a minor contraction or slower growth in 2021.
- Price-to-Book Value (P/BV) Ratio Trends
- The P/BV ratio followed a fluctuating pattern, starting at 6.05 in 2017 and increasing progressively to 7.46 in 2019. It then decreased significantly to 6.28 in 2020, coinciding with the drop in the share price and the increase in BVPS. In 2021, the ratio surged to its highest point at 8.3, driven by the increase in share price coupled with the slight decline in BVPS. This indicates that the market valuation relative to book value was most elevated in 2021, suggesting heightened investor expectations or perceived growth potential despite the marginal decrease in book value.
- Overall Observations
- The analysis reveals positive momentum in both market valuation and book value over the period, with 2020 showing a temporary reversal likely reflective of external economic factors. The marked increase in the P/BV ratio in 2021 points to a particularly optimistic market stance. The slight decline in book value in the same year contrasts with the strong increase in share price, highlighting a divergence between market perception and underlying accounting value.