Waste Management is a waste management company as its name is. As the number one operator in North America, it operates waste management businesses for residential, commercial, industrial and municipalities.
As of 2019, the company is operating 252 landfill sites, 314 transportation stations, and 102 recycling facility bases. This covers the entire United States and parts of Canada.
The business structure is largely divided into 5 categories. Collection, reclamation, transportation, recycling, and consulting are business areas, of which collection accounts for the largest portion of sales, accounting for about 66%
Sales by region account for about 93% of sales in the US, and total sales are on a steady increase for 3 years.
For three years, the company's ROE is over 20%, maintaining high productivity and consistent sales growth. Accordingly, both net asset per share BPS and dividend per share DPS have increased. It can be seen that not only dividends but also treasury stock purchases are steadily increasing, so it is operated in a shareholder-friendly management.
However, it can be seen that the company's net profit is declining because of the increase in debt due to mergers and acquisitions and the increase in long-term debt due to the expansion of landfill sites. Considering that long-term debt will inevitably increase when expanding the business, ROE is expected to recover when the increased landfill facilities begin to operate.
(Source: www.investing.com)
Share prices have been upward trending in the long term, and since 2000, dividends have been steadily increasing without cutting dividends. In order for companies to maintain high productivity and expand, financial soundness must be supported. After that, companies can buy back shares and increase dividends with a shareholder-friendly policy.
WM generates revenue by managing waste that will continue to grow unless the economy stops. Is that there is always an essential demand. As the largest waste company in North America, it has a high market share and is increasing its market share by merging the fourth largest company in the same business.
It is difficult for new competitors to enter the market due to the high cost of installing facilities necessary for business such as landfills and transportation trucks, and the limitation of the business that requires government approval.
The company meets all of our investment principles: essential demand, high productivity versus capital, overwhelming market share, high barriers to entry, and realization of shareholder value.
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