Waste Management, Inc. (WM) | Investment Case

1. Company Snapshot

1.a. Company Description

Waste Management, Inc., through its subsidiaries, provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America.It offers collection services, including picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility (MRF), or disposal site; and owns, develops, and operates landfill gas-to-energy facilities in the United States, as well as owns and operates transfer stations.As of December 31, 2021, the company owned or operated 255 solid waste landfills; 5 secure hazardous waste landfills; 96 MRFs; and 340 transfer stations.

It also provides materials processing and commodities recycling services; recycling brokerage services, such as managing the marketing of recyclable materials for third parties; and other strategic business solutions.In addition, the company offers construction and remediation services; services related with the disposal of fly ash, and residue generated from the combustion of coal and other fuel stocks; in-plant services comprising full-service waste management solutions and consulting services; and specialized disposal services for oil and gas exploration and production operations.The company was formerly known as USA Waste Services, Inc.

and changed its name to Waste Management, Inc.in 1998.Waste Management, Inc.

was incorporated in 1987 and is headquartered in Houston, Texas.

Show Full description

1.b. Last Insights on WM

Negative drivers behind Waste Management's recent performance include: * CFO Devina Rankin's retirement, which may lead to a disruption in the company's financial management and strategy. * The announcement of a quarterly cash dividend of $0.825 per share, which may indicate a lack of confidence in the company's ability to generate organic growth. * The company's participation in the waste management market, which is expected to witness moderate growth due to rapid urbanization and the booming hospitality sector, but also faces challenges from increasing e-waste and stringent government regulations. * The company's reliance on landfill waste management, which may be subject to changing regulations and public perception. * The company's commercial segment, which may be affected by the economic downturn and changes in consumer behavior. * The company's exposure to the North American market, which may be impacted by regional economic trends and regulatory changes. * The company's participation in the recycling of commercial waste, which may be affected by changes in market demand and supply chain disruptions.

1.c. Company Highlights

Last Price	213.58
Change Percentage	-0.28%
Open	213.07
Previous Close	214.19
Market Cap ( Millions)	86044
Volume	932626
Year High	242.58
Year Low	194.11
M A 50	212.18
M A 200	224.57

FCF Yield	2.79%
Dividend Yield	1.55%
ROE	28.79%
Debt / Equity	245.42%
Net Debt / EBIDTA	334.54%
Price To Book	9.04
Price Earnings Ratio	33.57
Price To FCF	35.82
Price To sales	3.47
EV / EBITDA	15.76

2. WM Delivers Strong Q3 2025 Earnings

WM reported a robust third quarter, with operating EBITDA growth of more than 15% and free cash flow growth of nearly 33%. Revenue came in at $4.83 billion, slightly below analyst estimates of $4.85 billion. The company's operating EBITDA margin was 30.6%, the best quarterly result in its history. Earnings per share (EPS) was $1.98, slightly below analyst estimates of $2.01. The company's legacy business achieved operating EBITDA margin of 32%, surpassing its long-standing ambition of sustained operating EBITDA margins above 30%.

Publication Date: Oct -30

                                    📋 Highlights
                                    Strong EBITDA and Free Cash Flow Growth:
                                                Operating EBITDA grew 15%, while free cash flow surged nearly 33% YoY in Q3 2025.
Record Operating EBITDA Margin:
                                                Total company margin reached 30.6%, driven by 120 bps expansion in legacy business margins to 32%.
Healthcare Solutions Integration Progress:
                                                ERP implementation challenges resolved, with SG&A intensity reduced by 700 bps since Q3 2024.
Sustainability Business Adjustments:
                                                Recycling EBITDA target for 2025 remains on track despite commodity price softness, with 45% RNG sales fixed at 2026 prices.
M&A and Capital Allocation:
                                                $450M in M&A closed YTD (projected $500M for 2025), with $3.8B free cash flow allocated for dividends, buybacks, and strategic acquisitions.

                                

Revenue Growth Drivers

The company's collection and disposal business continues to drive growth, with MSW growing 5% in the quarter and special waste volumes growing 5.5% driven by new event work. WM Healthcare Solutions also contributed to the growth, with the company successfully integrating the people and operations of healthcare solutions into its existing management and operating structure.

Margin Expansion

The company's operating EBITDA margin expanded due to continued optimization of business mix, operational efficiencies, scaling of sustainability businesses, and reducing costs. Devina Rankin mentioned that the legacy business achieved 120 basis points of margin expansion in the quarter. The remaining 60 basis points of margin expansion was driven by lower recycled commodity prices in the brokerage business and a reduction in incentive compensation costs.

Outlook and Guidance

The company remains confident in its ability to deliver the operating EBITDA and free cash flow guidance it provided last quarter. Full-year revenue is projected to be at the low end of the prior guidance range. The company has increased its margin expectations to between 29.6% and 30.2%. James Fish discussed the company's 2026 free cash flow projections, highlighting various contributing factors such as the wind-down of sustainability investments and the ramp-up of related EBITDA.

Valuation

WM's current valuation metrics are as follows: P/E Ratio of 31.05, P/B Ratio of 8.36, EV/EBITDA of 11.58, and Dividend Yield of 1.63%. Analysts estimate next year's revenue growth at 5.6%. With the company's strong financial performance and guidance, it is trading at a reasonable valuation multiple. The ROE of 28.79% and ROIC of 8.62% indicate a strong return on equity and invested capital.

3. NewsRoom

Are WM Stock Investors Happy, or Did They Miss Out?

Dec -03

Source: fool.com

Wallbridge Mining Company Limited (WM:CA) Presents at Metals & Mining Virtual Investor Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

A ‘Junk' Stock Rally? Waste Management Is Beating the Market Over the Past Month.

Dec -01

Source: barrons.com

Waste Management: A Premium Defensive Compounder With Years Of Growth Ahead

Dec -01

Source: seekingalpha.com

Waste Management: Why I'm Completely Unshaken

Nov -29

Source: seekingalpha.com

An Unstoppable Dividend Growth Machine For A Throwaway World: Waste Management

Nov -28

Source: seekingalpha.com

Black Friday Sale: 3 Magnificent Dividend Stocks Down 12% to 24% to Buy and Hold For 5 Years

Nov -28

Source: fool.com

Waste Management: A Defensive Core Holding With Underappreciated Growth Power

Nov -28

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.02%)

6. Segments

Collection and Disposal - East Tier

Expected Growth: 4.5%

Growing demand for waste management services in residential, commercial, and construction projects is driven by increasing environmental concerns, stringent regulations, and rising urbanization rates. Additionally, Waste Management’s strong brand reputation and efficient operations will contribute to its growth in the East Tier collection and disposal services segment.

Collection and Disposal - West Tier

Expected Growth: 4.3%

Waste Management's West Tier operations will benefit from increasing waste generation, population growth, and rising environmental awareness, driving demand for efficient waste collection and disposal services.

Collection and Disposal - Other Ancillary

Expected Growth: 5.5%

Waste Management’s other ancillary services will experience steady growth driven by increasing demand for specialized waste collection and disposal services. Additionally, government regulations and environmental concerns will continue to propel growth in this segment.

Recycling Processing and Sales

Expected Growth: 4.2%

Growing demand for sustainable waste management solutions, increasing government regulations and investments in recycling infrastructure drive the growth of Waste Management’s Recycling Processing and Sales segment.

Wm Healthcare Solutions

Expected Growth: 4.5%

Growing healthcare expenditure, increasing medical waste volumes, and stringent regulations drive demand for Waste Management's medical waste disposal and compliance solutions.

Wm Renewable Energy

Expected Growth: 6.5%

Increasing adoption of renewable energy sources, and growing concerns about climate change drive growth in Waste Management's renewable energy segment, leveraging landfill gas and other renewable energy sources.

Corporate and Other

Expected Growth: 4.5%

Waste Management's corporate overhead segment is expected to grow driven by increasing waste volumes, rising landfill costs, and higher recycling revenue, contributing to the company's overall profitability.

Elimination of intercompany operating revenues

Expected Growth: 2.3%

Waste Management's elimination of intercompany operating revenues to drive growth, fueled by increasing waste volumes, environmental regulations, and growing demand for sustainable waste management practices.

7. Detailed Products

Residential Trash and Recycling

Curbside collection of household trash and recyclables, including single-stream recycling and organics collection

Commercial Trash and Recycling

Customized waste management solutions for businesses, including dumpster rentals, recycling programs, and composting services

Construction and Demolition Debris Removal

Specialized services for construction and demolition projects, including roll-off dumpsters and debris recycling

Industrial Waste Management

Customized waste management solutions for industrial facilities, including hazardous waste disposal and recycling

Recycling and Composting

State-of-the-art recycling facilities and composting services to convert waste into valuable resources

Landfill Gas-to-Energy

Renewable energy production from landfill gas, generating electricity and heat

Organics and Food Waste Management

Specialized services for food waste and organic materials, including composting and anaerobic digestion

8. Waste Management, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Waste Management, Inc. has a low threat of substitutes due to the lack of alternative waste management services that can replace its offerings.

Bargaining Power Of Customers

Waste Management, Inc. has a medium bargaining power of customers due to the presence of some large customers, but the company's diversified customer base mitigates this risk.

Bargaining Power Of Suppliers

Waste Management, Inc. has a low bargaining power of suppliers due to its large scale of operations and ability to negotiate favorable terms with suppliers.

Threat Of New Entrants

Waste Management, Inc. has a low threat of new entrants due to the high barriers to entry in the waste management industry, including regulatory hurdles and significant capital requirements.

Intensity Of Rivalry

Waste Management, Inc. operates in a highly competitive industry with several large players, leading to a high intensity of rivalry among competitors.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	70.16%
Debt Cost	4.09%
Equity Weight	29.84%
Equity Cost	7.54%
WACC	5.12%
Leverage	235.10%

11. Quality Control: Waste Management, Inc. passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

TransDigm Group

A-Score: 6.4/10

Value: 3.0

Growth: 7.9

Quality: 6.7

Yield: 9.0

Momentum: 4.0

Volatility: 8.0

1-Year Total Return ->

PACCAR

A-Score: 6.0/10

Value: 3.7

Growth: 6.7

Quality: 6.1

Yield: 8.0

Momentum: 3.0

Volatility: 8.3

1-Year Total Return ->

Paychex

A-Score: 5.8/10

Value: 1.8

Growth: 5.8

Quality: 9.0

Yield: 6.0

Momentum: 3.0

Volatility: 9.3

1-Year Total Return ->

Waste Management

A-Score: 5.7/10

Value: 2.4

Growth: 6.0

Quality: 6.9

Yield: 3.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

Caterpillar

A-Score: 5.6/10

Value: 2.0

Growth: 7.0

Quality: 7.0

Yield: 3.0

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

Republic Services

A-Score: 5.5/10

Value: 1.7

Growth: 6.9

Quality: 5.4

Yield: 2.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

5.44%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.12%

Waste Management, Inc. - US94106L1098

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on WM

1.c. Company Highlights

Expensive

Less Volatile

Stable Momentum

Earnings Beats

Revenues Miss

Strong Momentum

Revenues Beats

Average Yield

Earnings Miss

Better Quality

Average Growth

2. WM Delivers Strong Q3 2025 Earnings

Revenue Growth Drivers

Margin Expansion

Outlook and Guidance

Valuation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.02%)

6. Segments

Collection and Disposal - East Tier

Expected Growth: 4.5%

Collection and Disposal - West Tier

Expected Growth: 4.3%

Collection and Disposal - Other Ancillary

Expected Growth: 5.5%

Recycling Processing and Sales

Expected Growth: 4.2%

Wm Healthcare Solutions

Expected Growth: 4.5%

Wm Renewable Energy

Expected Growth: 6.5%

Corporate and Other

Expected Growth: 4.5%

Elimination of intercompany operating revenues

Expected Growth: 2.3%

7. Detailed Products

Residential Trash and Recycling

Commercial Trash and Recycling

Construction and Demolition Debris Removal

Industrial Waste Management

Recycling and Composting

Landfill Gas-to-Energy

Organics and Food Waste Management

8. Waste Management, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Waste Management, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

12.e Scoring ^Insights

12.f DCF ^BETA