A Fresh Look at Waste Management's (WM) Valuation Following CFO Transition and Leadership Shakeup

If you hold shares or are eyeing Waste Management (WM), there is a significant leadership shuffle happening that could impact your outlook. The company’s longtime chief financial officer, Devina Rankin, just announced her retirement plans, with David Reed set to step in as CFO later this year. Leadership changes in the finance suite always attract investor interest since the CFO has a direct hand in how the company steers its growth, manages risk, and executes strategy.

This news comes during a year when Waste Management’s stock has advanced 12% since January, but it has trailed off over the last three months. For context, shares have gained around 9% over the past year and returned nearly 38% in three years. This reflects solid longer-term performance, though momentum has slowed somewhat this summer. Alongside executive changes, the company just affirmed another steady dividend, indicating a consistent approach even through transition.

Is this leadership shift creating a window for investors to pick up Waste Management at a good value, or has the market already considered future growth expectations?

Most Popular Narrative: 12.2% Undervalued

According to community narrative, Waste Management may be trading below its fair value, with analysts projecting stronger earnings and margin expansion in the years ahead.

The implementation of technology to supplement the workforce and optimize cost structures is expected to be a significant differentiator for Waste Management. This approach could potentially lead to improved net margins.

The company's strategic investments in sustainability, particularly in the areas of recycling and renewable energy, are showing strong, high-return growth. These initiatives could drive future revenue increases.

How did analysts come up with this bullish number? This narrative leans on ambitious targets for Waste Management’s profits and margin improvements, forecasting a major leap in both. Want to know which aggressive financial assumptions push this valuation so far above today’s price? Explore the narrative for the surprising drivers behind the upgrade.

Result: Fair Value of $256.45 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, potential setbacks such as regulatory shifts or integration hiccups from recent acquisitions could easily challenge these upbeat analyst forecasts.

Find out about the key risks to this Waste Management narrative.

Another View: Sizing Up Value from a Different Angle

While the earlier price target is based on future earnings forecasts, our DCF model points to the stock also being priced below fair value today. Could both methods be too optimistic, or perhaps not optimistic enough?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Waste Management for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Waste Management Narrative

If you have a different perspective, or would rather dig into the numbers yourself, it only takes a few minutes to build your own view. Do it your way

A great starting point for your Waste Management research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for More Investment Ideas?

Why stick to just one opportunity? If you want to keep your edge and spot smart stocks before the crowd, use these tailored screens to target your next move. Each one connects you with markets and industries that could power returns and diversify your investing strategy.

• Uncover the potential in affordable growth by targeting penny stocks with robust financials using penny stocks with strong financials. See which companies are positioned for big leaps ahead.
• Tap into the income advantage and find reliable dividend payers offering yields above 3 percent with the help of dividend stocks with yields > 3%. This can be useful for building steady returns into your portfolio.
• Accelerate your search for value by finding stocks trading below their cash flow value using undervalued stocks based on cash flows, so you never miss out when market mispricing creates real opportunities.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com