The Barrons article is nonsense. It states that the company is paying a dividend which is" 57% of it's free cash flow after capital spending." It's incredible that the writer, Michael Santoli, doesn't understand that the definition of free cash flow is, in fact, after capital spending. The stock, at 14x free cash flow of $2.50 per share is inexpensive, given the current level of interest rates. The free cash flow is recurring and visible, and offers stability, and little global risk. Their ownership of landfills and economies of scale create a huge barrier to enter the business. Through a recently announced restructuring, the company is addressing Santoli's concerns, and margins should improve.
The free cash flow of $1.15 billion is taken from the Barrons article. I confirmed it on the company's 2011 10k. If you divide $1.15 billion free cash flow by 463 million shares outstanding you get $2.48 per share.
Sorry , but my view of Barron's , is that that publication has become as shameless as CNBC .... just writing stories , with "possible" outcomes , based on certain premises, that are not always clear from the articles .....
just stuff to "fire my 'magination" , thank you Mick ... just read if for entertainment
No, it has not shot the the roof on the price.I prize the low beta for an industrial and the knowledge of what they are doing to help with recycling. I guess it is a novel idea to reward your shareholders with dividends. There will always be trash. I am confident enough in WM and their long term prospects that I set up my grandkids a portfolio with WM (along with VZ,NKE, and DIS) for years down the road.
Recognizing Barron's may be a bit off, I am wondering what affect the competition is having on this company. In my local area RMS and ITC seem to be growing rapidly and with better vehicles and technology in their field operations. This has got to be putting a hurt on WM (I own) in th elong run.
The only real competitor to WM is Republic Services. So, WM enjoys almost a oligopoly. Owning the landfills is also a huge advantage for WM. I think there is a lot of hidden value in this company. Management is taking steps to take meaningful, unnecessary costs out of the business. This should help release some of this value.
The Gates Foundation keeps buying. They own 4% of the company. WM is their #2 holding at 5% of their portfolio. In a recent Fortune Magazine article John Buckingham recommended buying WM at $32 with a price target 40% higher. What do value investors see that Santoli doesn't? High barriers to entry? A cyclical upturn as U.S. manufacturing recovers? Other reasons include..... (Fill in the dots)