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 | 55.55 | |
| Price to next year expected earnings | 28.74 | 51.98 | |
| Price-earnings-growth (PEG) | 2.45 | 8.09 | |
| Price to operating profit (P/OP) | 19.95 | 34.93 | |
| Price to sales (P/S) | 3.30 | 3.23 | |
| Price to book value (P/BV) | 8.30 | 8.49 | |
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).
The valuation multiples exhibit a general upward trajectory between 2017 and 2021, reflecting a significant expansion in the market's valuation of the equity relative to its underlying financial fundamentals.
- Price to Earnings (P/E) and Price to Operating Profit (P/OP)
- Both earnings and operating profit multiples demonstrate a strong growth pattern. The P/E ratio increased from 18.70 in 2017 to 32.57 in 2021, with the most pronounced surge occurring between 2018 and 2019. Similarly, the P/OP ratio rose from 13.82 to 19.95 over the same period. The tight correlation between these two metrics suggests a consistent increase in the premium investors are willing to pay for the company's profitability.
- Price to Sales (P/S)
- The P/S ratio followed a moderately upward trend, rising from 2.52 in 2017 to 3.30 in 2021. A slight contraction was observed in 2020, where the ratio dipped to 3.07, before recovering in the subsequent year. This indicates a relatively more stable valuation relative to revenue when compared to the more aggressive expansion seen in the earnings-based multiples.
- Price to Book Value (P/BV)
- The P/BV ratio experienced the highest degree of volatility among the measured multiples. While the ratio grew from 6.05 in 2017 to 8.30 in 2021, a notable decline occurred in 2020, dropping to 6.28. The subsequent rise to 8.30 in 2021 represents the highest valuation relative to book value within the analyzed five-year period.
Overall, the observed patterns indicate a broad valuation expansion across all measured price multiples, with the most substantial shifts occurring in the metrics tied to bottom-line profitability and net asset value.
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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
An analysis of the valuation multiples from 2017 to 2021 reveals a significant expansion in the price-to-earnings (P/E) ratio, indicating a shift in market valuation and investor sentiment toward the company's earnings.
- Share Price Performance
- The share price exhibited a general upward trajectory over the five-year period, rising from 84.02 US$ in 2017 to 142.68 US$ by 2021. A temporary contraction occurred in 2020, where the price declined to 110.56 US$, before reaching a period peak in 2021.
- Earnings per Share (EPS) Volatility
- Earnings per share displayed a fluctuating pattern. After a slight increase to 4.54 US$ in 2018, EPS entered a downward trend, reaching a low of 3.54 US$ in 2020. A recovery was observed in 2021, with EPS returning to 4.38 US$, nearly approximating the 2017 levels.
- P/E Ratio Expansion
- The P/E ratio experienced a substantial increase, growing from 18.70 in 2017 to 32.57 in 2021. The most pronounced acceleration occurred between 2018 and 2019, where the ratio rose from 21.76 to 31.59. Following this surge, the multiple stabilized at a higher plateau, remaining above 31.00 through 2021.
- Valuation Drivers
- The divergence between the share price and EPS between 2018 and 2020 suggests that the increase in market value was driven by multiple expansion rather than organic earnings growth. The transition from a P/E in the high teens to the low thirties reflects a higher premium assigned to each dollar of earnings, potentially indicating increased investor confidence in long-term growth or a flight to perceived stability during the 2019-2021 window.
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Price to Operating Profit (P/OP)
Waste Management Inc., historical P/OP calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Operating profit per share = Income from operations ÷ No. shares of common stock outstanding
= 2,965,000,000 ÷ 414,586,718 = 7.15
3 Closing price as at the filing date of Waste Management Inc. Annual Report.
4 2021 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 142.68 ÷ 7.15 = 19.95
An analysis of the valuation metrics from 2017 to 2021 reveals a consistent expansion in the price multiple relative to operating profit, suggesting an increase in the market's valuation of the company's core earnings power.
- Share Price Trends
- The share price exhibited a general upward trajectory, increasing from 84.02 US$ in 2017 to 142.68 US$ by 2021. A temporary contraction was observed in 2020, where the price declined to 110.56 US$, prior to a strong recovery in the final year of the period.
- Operating Profit per Share Performance
- Operating profit per share experienced volatility over the five-year span. After an initial rise to 6.58 US$ in 2018, a downward trend occurred through 2020, with the value bottoming at 5.75 US$. A significant reversal took place in 2021, with operating profit per share reaching a period peak of 7.15 US$.
- Price to Operating Profit (P/OP) Ratio Analysis
- The P/OP ratio rose from 13.82 in 2017 to 19.95 in 2021. The most substantial expansion occurred between 2018 and 2019, where the ratio climbed from 15.02 to 19.50. Notably, the ratio remained elevated above 19.00 from 2019 through 2021, indicating that the share price grew at a faster rate than the operating profit per share during the early part of this window and maintained that premium despite intermediate fluctuations in profitability.
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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
An analysis of the valuation multiples from 2017 to 2021 reveals a general expansion in the market's valuation of the company relative to its revenue. The Price to Sales (P/S) ratio increased from 2.52 in 2017 to 3.30 by the end of 2021, indicating that investors were willing to pay a higher premium for each dollar of sales over this five-year period.
- Share Price Movement
- The share price exhibited a strong upward trajectory, rising from 84.02 US$ in 2017 to a peak of 142.68 US$ in 2021. A temporary decline was observed in 2020, where the price dropped to 110.56 US$ from a 2019 high of 124.23 US$, before rebounding sharply in the final year.
- Sales per Share Performance
- Sales per share grew steadily from 33.40 US$ in 2017 to 36.39 US$ in 2019. After a marginal decrease to 35.96 US$ in 2020, there was a significant increase to 43.25 US$ in 2021, representing the highest revenue per share in the observed period.
- Price to Sales (P/S) Ratio Trends
- The P/S ratio increased consistently between 2017 and 2019, reaching 3.41, which suggests that share price appreciation outpaced revenue growth during this interval. A contraction occurred in 2020, with the ratio falling to 3.07, coinciding with the dip in share price. By 2021, the ratio recovered to 3.30, reflecting a realignment of market valuation as both share price and sales per share increased.
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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
Analysis of the valuation metrics from 2017 to 2021 reveals a general trend of increasing market premiums over the company's book value, despite intermittent fluctuations in share pricing.
- Equity Valuation Trends
- The P/BV ratio experienced a net increase over the five-year period, starting at 6.05 in 2017 and ending at 8.30 in 2021. This progression was not linear; a peak of 7.46 was reached in 2019, followed by a correction to 6.28 in 2020, before reaching its period high in 2021.
- Market Price Dynamics
- The share price increased from 84.02 in 2017 to 142.68 in 2021. The most notable volatility occurred between 2019 and 2021, with a decline to 110.56 in 2020 followed by a rapid recovery and expansion in 2021.
- Asset Value Stability
- Book value per share maintained a steady upward trend from 2017 (13.88) through 2020 (17.61). A reversal occurred in 2021, with the value decreasing to 17.18. The divergence observed in 2021, where the P/BV ratio expanded while BVPS contracted, indicates that the increase in market valuation was driven entirely by share price appreciation rather than growth in net assets.
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