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Deutsche sees 'significant FCF/share growth' for Waste Management, initiates buy

Published 22/05/2024, 17:16
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On Wednesday, Deutsche Bank (ETR:DBKGn) initiated coverage on shares of Waste Management (NYSE:WM), the largest waste hauler in North America, with a Buy rating and a price target of $241. The firm highlighted the company's extensive presence across the United States and Canada, including the largest network of landfills in its service areas.

Waste Management's industry-leading capabilities are said to provide the ability to deliver consistent, reliable results. The company's strategic investments in technology and sustainability are projected to yield a significant increase in EBITDA, with an expected $800 million in run-rate EBITDA by the end of 2026.

The analyst expects Waste Management to experience considerable growth in free cash flow per share over the next three years. This growth is anticipated as a result of the company's commitment to making the right and necessary long-term investments.

Additionally, Waste Management currently boasts a return on invested capital (ROIC) of 13%, which is the highest in the industry.

The new coverage and optimistic outlook reflect Waste Management's strong position in the industry and its potential for continued financial growth. The company's focus on technological advancements and sustainability measures appears to be a driving force behind the positive assessment and the substantial price target set by Deutsche Bank.

InvestingPro Insights

As Waste Management (NYSE:WM) garners a favorable rating from Deutsche Bank, insights from InvestingPro provide additional context into the company's financial health and market performance. With a robust market cap of $83.6 billion and a price-to-earnings (P/E) ratio of 34.12, the company is recognized for its stability and growth potential. Adjusted P/E for the last twelve months as of Q1 2024 stands at 31.28, reflecting the company's earnings capacity.

InvestingPro Tips highlight Waste Management's consistency in rewarding investors, having raised its dividend for 20 consecutive years and maintaining dividend payments for 27 consecutive years. This is particularly significant as it demonstrates the company's commitment to shareholder returns. Additionally, 13 analysts have revised their earnings upwards for the upcoming period, suggesting a positive outlook on the company's future performance.

With a dividend yield of 1.44% and a dividend growth of 7.14% in the last twelve months as of Q1 2024, Waste Management continues to be a prominent player in the Commercial Services & Supplies industry. For readers looking to delve deeper into the financial nuances of Waste Management, InvestingPro offers more comprehensive analysis and tips. Discover more about how to optimize your investment strategies with InvestingPro and use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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