Why is Waste Management is getting such a high valuation? in General Discussion Posted December 19, 2016 Hi, I was looking at WM's historical cash flows and noticed the following: 1. Revenue, EBITDA, FCFE, and EPS have grown between 1% and 3% per annum over the last 10 years. 2. Average ROE -10 yrs = 9% 3. Avg. Return on Capital Employed (Greenblatt) = 18% 4. While the capital employed (including or excluding intangibles and goodwill) has remain unchanged, EBIT has grown 2% over the 10-year period. 5. The company spends 60% of its FCFE in dividends and 30% in stock buybacks, and the rest in acquisitions. Now when I look at its valuation using a 10-year DCF model, the current price seems to imply 9% annual growth in FCFE. What do you attribute to such a high premium to a non-growth business, institutional following? Thanks
Why is Waste Management is getting such a high valuation?
in General Discussion
Posted
Hi,
I was looking at WM's historical cash flows and noticed the following:
1. Revenue, EBITDA, FCFE, and EPS have grown between 1% and 3% per annum over the last 10 years.
2. Average ROE -10 yrs = 9%
3. Avg. Return on Capital Employed (Greenblatt) = 18%
4. While the capital employed (including or excluding intangibles and goodwill) has remain unchanged, EBIT has grown 2% over the 10-year period.
5. The company spends 60% of its FCFE in dividends and 30% in stock buybacks, and the rest in acquisitions.
Now when I look at its valuation using a 10-year DCF model, the current price seems to imply 9% annual growth in FCFE.
What do you attribute to such a high premium to a non-growth business, institutional following?
Thanks