Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Waste Management, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.0% to 3.5% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 55, DPO 43, DIO 4). At a 8.2% WACC with mid-year discounting, the terminal value (87% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 17.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $262.40 per share, suggesting WM is undervalued by 15.4% at the current price of $227.45.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 4,092 | 4,313 | 4,518 | 4,783 | 4,952 | 5,075 |
| (−) Net Interest | 674 | 710 | 744 | 788 | 816 | 836 |
| (+) D&A | 2,769 | 3,080 | 3,292 | 3,477 | 3,640 | 3,731 |
| EBITDA | 7,534 | 8,103 | 8,554 | 9,048 | 9,407 | 9,643 |
| (−) Tax | 917 | 967 | 1,013 | 1,072 | 1,110 | — |
| (−) CapEx | 3,460 | 3,647 | 3,821 | 4,045 | 4,188 | — |
| (−) ΔWC | -2,101 | 106 | 98 | 127 | 81 | — |
| Free Cash Flow (FCF) | 5,257 | 3,383 | 3,623 | 3,804 | 4,029 | — |
| Peers' EBITDA Multiple | 17.3x | |||||
| Terminal Value | 166,430 | |||||
| WACC / Discount Rate | 8.24% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 5,053 | 3,005 | 2,972 | 2,884 | 2,822 | 112,043 |
| Enterprise Value | 128,778 | |||||
| Projection Period | 16,736 | 13.0% | ||||
| Terminal Value | 112,043 | 87.0% | ||||
| (−) Current Net Debt | 22,706 | |||||
| Equity Value | 106,072 | |||||
| (÷) Outstanding Shares | 404M | |||||
| Fair Price | $262 | +15.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 13.3x | 15.3x | 17.3x | 19.3x | 21.3x |
|---|---|---|---|---|---|
| 6.2% | $221 | $256 | $291 | $327 | $362 |
| 7.2% | $209 | $243 | $276 | $310 | $344 |
| 8.2% | $198 | $230 | $262 | $295 | $327 |
| 9.2% | $188 | $218 | $249 | $280 | $310 |
| 10.2% | $178 | $207 | $237 | $266 | $295 |
Current price: $227.45. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.