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Waste Management (WM)
NYSE:WM
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Waste Management
(NYSE:WM)
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Rating:74Outperform
Price Target:
$259.00
▲(16.06% Upside)
The score is driven primarily by solid financial performance and a strong earnings outlook, including margin expansion and sharply higher free cash flow with shareholder-friendly capital returns. Offsetting factors are a rich valuation (P/E 36.45) and near-term technical overheating signals (RSI 72, Stoch 95.8) despite an overall positive trend.
Positive Factors
Strong Operating EBITDA Growth
The significant growth in operating EBITDA and free cash flow indicates robust operational performance and financial health, supporting long-term growth initiatives.
Collection and Disposal Business Performance
The growth in MSW and special waste volumes highlights Waste Management's strong market position and ability to drive revenue from core operations, ensuring sustainable growth.
Recycling Segment Growth
The recycling segment's EBITDA growth despite price declines shows resilience and adaptability, enhancing long-term sustainability and environmental stewardship.
Negative Factors
High Leverage
High leverage could pose risks if market conditions change, potentially impacting financial flexibility and increasing vulnerability to economic downturns.
Healthcare Solutions Revenue Challenges
Slower revenue growth in Healthcare Solutions may hinder overall growth prospects, requiring strategic adjustments to improve performance in this segment.
Natura PCR Plant Temporary Closure
The temporary closure of the Natura PCR plant indicates potential operational disruptions and regulatory challenges, affecting long-term strategic goals in recycling.
Waste Management (WM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$89.90B
Dividend Yield1.5%
Average Volume (3M)1.75M
Price to Earnings (P/E)33.3
Beta (1Y)0.11
Revenue Growth15.88%
EPS Growth-3.11%
CountryUS
Employees61,700
SectorIndustrials
Sector Strength72
IndustryWaste Management
Share Statistics
EPS (TTM)1.93
Shares Outstanding402,867,070
10 Day Avg. Volume2,681,256
30 Day Avg. Volume1,749,828
Financial Highlights & Ratios
PEG Ratio1.46
Price to Book (P/B)9.82
Price to Sales (P/S)3.67
P/FCF Ratio37.53
Enterprise Value/Market Cap1.27
Enterprise Value/Revenue4.59
Enterprise Value/Gross Profit15.89
Enterprise Value/Ebitda16.43
Forecast
1Y Price Target
$252.94Price Target Upside13.34% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering19
EPS Forecast (FY)8.22
Revenue Forecast (FY)$26.51B
Waste Management Business Overview & Revenue Model
Company DescriptionWaste 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.
How the Company Makes MoneyWaste Management generates revenue primarily through its core services, which include waste collection, disposal fees, and recycling operations. The collection segment involves charging customers for regularly scheduled pickups of trash and recyclables, while the disposal segment earns revenue from tipping fees charged to customers who deposit waste at landfills. Recycling operations also provide income through the sale of recovered materials. Additionally, WM benefits from long-term contracts with municipalities and commercial customers, which ensure consistent cash flow. The company further enhances its earnings through partnerships with local governments and businesses to provide customized waste management solutions. Factors contributing to its financial performance include increasing demand for sustainable waste disposal methods, regulatory support for recycling initiatives, and the ongoing trend towards environmental responsibility among consumers and corporations.
Waste Management Key Performance Indicators (KPIs)
Any
Revenue by Segment
Shows how much revenue each business segment generates, providing a clear picture of the company's diverse operations and which areas are driving growth or facing challenges.
Shows how much revenue each business segment generates, providing a clear picture of the company's diverse operations and which areas are driving growth or facing challenges.
Data provided by:
The Fly
The FlyWaste Management Earnings Call Summary
Earnings Call Date:Jan 28, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The call emphasized multiple clear operational wins — record cost and margin performance, strong cash flow and free cash flow growth, tangible fleet and labor improvements, and meaningful progress scaling sustainability and recycling initiatives. Management acknowledged integration-related challenges in Healthcare Solutions (lost accounts, credit memos and elevated SG&A) and external headwinds (lower commodity prices and wildfire comparability). However, the breadth and magnitude of positive operational and financial metrics, combined with strong cash generation and a shareholder-friendly capital allocation plan, outweigh the identifiable near-term challenges.Q4-2025 Updates
Positive Updates
Record Margin and Cost Performance
Full-year operating EBITDA margin reached 30.1% (up 40 bps year-over-year). Legacy Business normalized margin expanded ~180 bps for the year, and collection & disposal operating EBITDA margin expanded 160 bps in Q4. Operating expenses as a percent of revenue improved to 58.5% in Q4 (improving 180 bps) and finished the year at 59.5% — the first full year below 60% in company history.
Strong Cash Flow and Free Cash Flow Growth
Cash flow from operations grew >12% to $6.04 billion in 2025. Free cash flow increased nearly 27% to $2.94 billion in 2025, and management expects free cash flow to grow ~30% in 2026 (guidance midpoint to about $3.8 billion).
Operational Execution — Fleet and Labor Improvements
Investments in newer trucks and fleet strategies reduced repair & maintenance and third-party spend; driver turnover hit its lowest level of the year at 15.7%, supporting labor cost improvements and higher technician productivity.
Disciplined Pricing and Top-Line Resilience
Pricing remained strong with core price of 6.2% in Q4 2025. 2026 core price guidance includes 5.6% (collection & disposal) and company guidance embeds ~3% top-line growth, with management calling out disciplined price realization as a driver of margin expansion.
Sustainability Growth and Renewable Natural Gas (RNG) Expansion
WM commissioned 7 new RNG facilities in 2025, doubled RNG output projected for 2026 vs. 2025, and committed sustainability capital. Sustainability growth contribution to 2026 operating EBITDA was guided at $235M–$255M, and management highlighted ~60% of that from renewable energy and ~40% from recycling.
Recycling Segment Resilience
Recycling operating EBITDA grew over 22% in 2025 despite nearly 20% lower commodity prices year-over-year, driven by automation, throughput gains, labor improvements and strategic investments (automation upgrades at 5 recycling facilities and new facilities in 4 markets).
Capital Allocation and Shareholder Returns
Board approved a 14.5% increase in the planned quarterly dividend rate for 2026 and authorized a new $3.0 billion share repurchase program. Management plans to return about $3.5 billion to shareholders in 2026 (~>90% of expected free cash flow).
Balance Sheet and M&A Activity
2025 included $1.0 billion of debt paydown, reducing leverage to 3.1x with an expectation to reach the 2.5–3.0x target range during 2026. WM invested >$400 million in tuck-in acquisitions in 2025 and expects to continue disciplined M&A in the $100M–$200M annual range.
Negative Updates
Healthcare Solutions Integration and Revenue Dilution
Healthcare Solutions experienced integration headwinds (lost accounts and credit memos) that diluted revenue. Management expects Healthcare Solutions revenue growth of 3.0% in 2026 with price at 4.2%, reflecting near-term volume pressure from accounts that will anniversary in the back half of the year.
Elevated Healthcare SG&A (Although Improving)
Healthcare Solutions SG&A remained elevated at 20.8% of revenue in Q4 2025 (improved 350 bps year-over-year). Company is executing on synergy goals but SG&A normalization remains a work stream to reach corporate targets.
Commodity Price Headwinds for Recycling
Recycled commodity prices were nearly 20% lower in 2025 versus 2024, creating a headwind to revenue and making long-range sustainability EBITDA targets sensitive to commodity assumptions (management noted a lower-price baseline assumption reduced projected sustainability growth EBITDA versus prior Investor Day).
Wildfire Cleanup Volume Comparability
Wildfire cleanup volumes in 2025 create difficult year-over-year comparisons. Management noted 2026 operating EBITDA guidance is 6.2% at midpoint or 7.4% when normalized for the 2025 wildfire cleanup contribution, implying a roughly ~1.2 percentage-point comp impact.
RNG/Voluntary Market and RIN/Policy Risks
A portion of RNG volumes (~40% for 2026) will be sold into voluntary markets and rely on RIN pricing (management expects RINs ~$2.30–$2.40). Management indicated some voluntary markets are softer domestically, and policy timing (EPA rule-making) and commodity/RIN price volatility remain potential risk factors.
Accounting and Comparability Adjustments
Guidance excludes projected accretion expense (~$150M) to enhance comparability; investment tax credit timing/amounts changed (expected benefit ~$110M in 2026, a ~$75M headwind vs. prior year). These adjustments may complicate direct GAAP comparability across periods.
Company Guidance
WM guided 2026 operating EBITDA of $8.15–$8.25 billion (excludes ~ $150M of projected accretion expense), implying ~6.2% growth at the midpoint (7.4% normalizing for 2025 wildfire cleanup), and called for ~30 bps of EBITDA margin expansion at the midpoint (≈50 bps on an adjusted basis ex-wildfires). Free cash flow is expected to grow nearly 30% to about $3.8 billion (driving EBITDA→FCF conversion above 46%), with capex of $2.65–$2.75 billion (≈$200M for sustainability projects and roughly $85M for two RNG facilities plus one recycling project); sustainability growth EBITDA contribution is projected at $235–$255M. The outlook assumes an effective tax rate of ~24%, year-end diluted share count ≈402 million, an investment tax credit benefit of ≈$110M (a ~$75M headwind vs. prior year), and a target leverage range of 2.5–3.0x (currently 3.1x) as the company plans roughly $3.5 billion of shareholder returns in 2026 (including a new $3.0B repurchase authorization and a 14.5% planned quarterly dividend rate increase).Waste Management Financial Statement Overview
Summary
Strong profitability and consistency (TTM gross margin 28.97%, net margin 11.36%) with solid cash generation and improving free cash flow growth (FCF growth 11.05%). Balance sheet risk remains due to high leverage (debt-to-equity 2.61), and there is mild operating pressure as EBIT margin dipped versus 2024 (18.38% to 17.57% TTM).Income Statement
Waste Management has demonstrated consistent revenue growth, with a TTM revenue growth rate of 3.48% and a strong gross profit margin of 28.97%. The net profit margin is healthy at 11.36%, indicating efficient cost management. However, the slight decline in EBIT margin from 18.38% in 2024 to 17.57% in TTM suggests some pressure on operational efficiency.82
Very Positive
Balance Sheet
The company maintains a stable financial position with a debt-to-equity ratio of 2.61, showing a slight improvement from 3.02 in 2024. Return on equity remains robust at 31.93%, reflecting strong profitability. However, the high leverage indicates potential risk if market conditions change unfavorably.75
Positive
Cash Flow
Operating cash flow is strong, with a TTM operating cash flow to net income ratio of 0.97, indicating good cash generation relative to earnings. Free cash flow growth is positive at 11.05%, showing improvement from previous periods. However, the free cash flow to net income ratio of 0.38 suggests room for improvement in cash flow efficiency.78
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 24.78B | 22.06B | 20.43B | 19.70B | 17.93B | 15.22B |
| Gross Profit | 7.17B | 6.41B | 5.75B | 5.37B | 4.82B | 4.21B |
| EBITDA | 6.93B | 6.46B | 5.72B | 5.45B | 4.82B | 4.09B |
| Net Income | 2.56B | 2.75B | 2.30B | 2.24B | 1.82B | 1.50B |
Balance Sheet | ||||||
| Total Assets | 45.61B | 44.57B | 32.82B | 31.37B | 29.10B | 29.34B |
| Cash, Cash Equivalents and Short-Term Investments | 175.00M | 414.00M | 458.00M | 351.00M | 118.00M | 553.00M |
| Total Debt | 23.36B | 23.90B | 16.23B | 14.98B | 13.40B | 13.81B |
| Total Liabilities | 36.09B | 36.31B | 25.93B | 24.50B | 21.97B | 21.89B |
| Stockholders Equity | 9.52B | 8.25B | 6.90B | 6.85B | 7.12B | 7.45B |
Cash Flow | ||||||
| Free Cash Flow | 2.40B | 2.16B | 1.82B | 1.95B | 2.43B | 1.77B |
| Operating Cash Flow | 5.86B | 5.39B | 4.72B | 4.54B | 4.34B | 3.40B |
| Investing Cash Flow | -10.46B | -10.60B | -3.09B | -3.06B | -1.89B | -4.85B |
| Financing Cash Flow | 4.23B | 5.16B | -1.52B | -1.22B | -2.90B | -1.56B |
Waste Management Technical Analysis
Positive
223.16
Price Trends
219.13
Positive
215.37
Positive
221.72
Positive
Market Momentum
2.14
Positive
54.90
Neutral
36.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WM, the sentiment is Positive. The current price of 223.16 is above the 20-day moving average (MA) of 223.06, above the 50-day MA of 219.13, and above the 200-day MA of 221.72, indicating a bullish trend. The MACD of 2.14 indicates Positive momentum. The RSI at 54.90 is Neutral, neither overbought nor oversold. The STOCH value of 36.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WM.
Waste Management Risk Analysis
Waste Management disclosed 38 risk factors in its most recent earnings report. Waste Management reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Waste Management Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $13.97B | 36.28 | 14.64% | ― | 2.85% | -6.27% | |
74 Outperform | $89.90B | 33.31 | 29.69% | 1.50% | 15.88% | -3.11% | |
72 Outperform | $66.78B | 32.06 | 18.24% | 1.11% | 4.33% | 7.59% | |
69 Neutral | $6.50B | 430.10 | 0.98% | ― | 20.54% | 106.35% | |
68 Neutral | $818.77M | -24.31 | -4.17% | ― | 22.77% | 44.73% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
56 Neutral | $1.55B | -9.26 | -38.53% | ― | -2.91% | -67.18% |
* Industrials Sector Average
WM
Waste Management
225.09
6.21
2.84%
CWST
Casella Waste
103.18
-4.59
-4.26%
CLH
Clean Harbors
261.49
26.28
11.17%
NVRI
Enviri
19.19
9.89
106.34%
RSG
Republic Services
213.95
-3.01
-1.39%
MEG
Montrose Environmental Group
22.94
3.06
15.39%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.