WM — North America's dominant waste hauler, trading at the sector's lowest EV/EBITDA with a 30%+ ROE

Stock: Waste Management, Inc. (NYSE: WM) | Sector: Industrials / Waste Management | Market cap: $86.18B 1

Price (Jun 18, 2026 close): $214.60 | 52-week range: $194.11–$248.13 | Next earnings: July 27, 2026 (estimated, after market close) 2

Why WM passed the screen today

Criterion	WM result	Pass?
ROE > 15% — FY2023	33.08% (avg-equity method) 1	✅
ROE > 15% — FY2024	36.24% (avg-equity method) 1	✅
ROE > 15% — FY2025	29.70% (avg-equity method) 1	✅
FCF positive — all three years	$1.82B / $2.16B / $2.82B / $3.29B TTM 3	✅
Valuation reasonable	Trailing P/E 31.06× vs. 5-yr avg 32.41×; EV/EBITDA 14.21× (lowest in peer group) 1	✅

ROE methodology note: All annual ROE figures use StockAnalysis's average-equity method (beginning + ending equity averaged, then divided into net income). For reference, Finviz independently reports TTM ROE at 29.93% — consistent with the 29.94% average-equity TTM figure, confirming the direction across both sources. 1 2

Trailing P/E

31.06×

EV/EBITDA

14.21×

ROE (FY2025)

29.70%

FCF (TTM)

$3.29B

FCF yield

3.82%

Next earnings

Jul 27

統計カードを読み込んでいます…

What Waste Management actually does

Founded in 1968 and headquartered in Houston, Texas, Waste Management, Inc. (WM) is North America's largest waste management company — larger than its nearest competitor, Republic Services (RSG), by revenue, market cap, and landfill assets. 4

The business collects trash, hauls it to transfer stations, buries or processes it, and increasingly converts it to energy. WM operates five segments:

Collection and Disposal — East Tier: Residential, commercial, and industrial pickup routes across the eastern U.S. and Canada
Collection and Disposal — West Tier: Same model across the western U.S.
Recycling Processing and Sales: Processes commodities (paper, plastics, metals) at Materials Recovery Facilities (MRFs) and sells recovered materials to manufacturers
Renewable Energy: Captures landfill gas and converts it to electricity and Renewable Natural Gas (RNG) sold to utilities and commercial customers
Healthcare Solutions: Medical waste management, acquired via the $7.5B purchase of Stericycle in Q4 2024 4

Revenue for FY2025 totaled $25.2B, and the company employs roughly 60,500 people. 5

ROE: three consecutive years well above 15%

Fiscal year (ends Dec 31)	Net income	Avg. shareholders' equity	ROE (avg-equity)
FY2023	$2,276M 5	$6,882M 6	33.08% 1
FY2024	$2,745M 5	$7,577M 6	36.24% 1
FY2025	$2,709M 5	$9,118M 6	29.70% 1
TTM (Mar 31, 2026)	$2,795M	$9,340M 6	29.94% 1

The FY2025 step-down from 36.24% to 29.70% is worth examining. Net income declined slightly (-1.4% to $2.71B) as the Stericycle acquisition pushed interest expense to $912M (vs. $598M in FY2024) and D&A to $2.86B (vs. $2.27B). Simultaneously, the equity base grew by roughly $1.7B as retained earnings accumulated and acquisition-related goodwill landed on the books. Both factors are mechanical compression, not deterioration in the underlying business. TTM ROE of 29.94% is consistent — three consecutive years clearing the 15% threshold by a wide margin. 5

Among direct peers, WM's 29.94% TTM ROE is the highest in the group: RSG at 18.35%, WCN at 13.12%, GFL at 2.99%, CWST at 0.46%. 7 8 9 10

ROIC of 11.34% (TTM) exceeds WM's estimated WACC of 6.00%, confirming the business creates economic value rather than merely growing capital deployed. 1

Free cash flow: $3.29B TTM, growing at 13% 3-year CAGR

チャートを読み込んでいます…

Period	Operating CF	CapEx	FCF	YoY change
FY2023	$4,719M	-$2,895M	$1,824M	—
FY2024	$5,390M	-$3,231M	$2,159M	+18.4%
FY2025	$6,043M	-$3,227M	$2,816M	+30.4%
TTM (Mar 31, 2026)	$6,336M	-$3,046M	$3,290M	+16.8% vs FY2025

Source: 3

Three data points anchor this picture. First, FCF has grown in every period shown — no interruptions despite a $7.5B acquisition in FY2024. Second, operating cash flow is doing more of the lifting: OCF grew from $4.72B to $6.34B TTM (+34%) while CapEx was flat or declining. Third, FCF more than covers the $1.38B annual dividend (TTM payout ratio: 51.23% of earnings, but just 42% of FCF), leaving $1.9B in residual cash after dividends — available for debt paydown, buybacks, or further acquisitions. 3

FCF per share TTM is $8.19, implying a P/FCF ratio of 26.19×. 1

Valuation: lowest EV/EBITDA in the peer group, slight P/E discount to own history

P/E vs. WM's own five-year history

Year	Trailing P/E
FY2021	38.90×
FY2022	29.11×
FY2023	31.64×
FY2024	29.63×
FY2025	32.79×
5-year simple average	32.41×
Current (Jun 18, 2026)	31.06×

Source: 11 1

The current trailing P/E of 31.06× is 4.2% below the five-year average of 32.41×. By itself that is a modest discount — not a deep-value setup. The more meaningful signal is the EV/EBITDA comparison across peers.

WM vs. waste-sector peers

Company	Trailing P/E	Forward P/E	P/B	EV/EBITDA	FCF yield	ROE (TTM)
WM	31.06×	25.61×	8.61×	14.21×	3.82%	29.94%
RSG	29.40×	27.49×	5.27×	14.83×	—	18.35%
WCN	37.54×	27.37×	4.86×	15.77×	—	13.12%
GFL	109.22×	56.56×	2.37×	15.82×	—	2.99%
CWST	774.68×	74.83×	3.53×	16.36×	—	0.46%

Sources: 1 7 8 9 10

WM's EV/EBITDA of 14.21× is the lowest in the group, despite WM having the highest revenue ($25.4B), the highest net income ($2.8B TTM), and the highest ROE (29.94%). GFL, WCN, and CWST all trade at EV/EBITDA premiums while generating materially lower returns. RSG is closest in operational quality (ROE 18.35%, EV/EBITDA 14.83×), so the relevant comparison is the ~62-basis-point EV/EBITDA gap between WM and RSG against WM's 11.6-point ROE advantage.

The elevated P/B (8.61× vs. peers' 2.37–5.27×) is a function of superior ROE — a business generating 30% returns on equity will almost always trade above book, and rightly so. Penalizing WM for a high P/B without adjusting for its ROE premium would be a category error.

PEG of 2.18× (based on consensus 3-year EPS growth of 10.82%) is above the traditional 1.0 threshold. WM is not a growth-at-a-discount stock; it is a high-quality compounder trading at a measured discount to its own history, with the best EV/EBITDA in the sector. 1

Analyst consensus: 28 analysts cover WM with a consensus Buy rating and an average price target of $256.04, implying +19.3% upside from the June 18 closing price of $214.60. Notable calls include a UBS Buy initiation at $260 and a Goldman Sachs Buy initiation at $256, both in late 2025. 2

Revenue and earnings: $25B scale with 9% five-year CAGR

チャートを読み込んでいます…

Period	Revenue	YoY growth	Net income	Diluted EPS	Op. margin	Net margin
FY2021	$17.93B	—	$1.82B	$4.29	16.54%	10.13%
FY2022	$19.70B	+9.9%	$2.24B	$5.39	17.08%	11.37%
FY2023	$20.43B	+3.7%	$2.28B	$5.66	17.50%	11.14%
FY2024	$22.06B	+8.0%	$2.75B	$6.81	18.42%	12.44%
FY2025	$25.20B	+14.2%	$2.71B	$6.70	17.09%	10.75%
TTM	$25.41B	+10.6% YoY	$2.80B	$6.91	17.35%	11.00%

Source: 5

The FY2025 revenue jump of +14.2% is almost entirely attributable to the Stericycle acquisition closing in Q4 2024 — it added roughly $2.6B in annualized Healthcare Solutions revenue. Organic growth ran at mid-single digits, consistent with prior years.

The FY2025 earnings decline (-1.4% to $2.71B) reflects three one-time integration headwinds: interest expense rose to $912M from $598M as acquisition debt was absorbed; D&A expanded to $2.86B from $2.27B as Stericycle's asset base was added to the books; and integration costs ran through the P&L. TTM net income of $2.80B is already recovering, with operating margin back to 17.35%. 5

Gross margin has steadily expanded from 38.03% (FY2021) to 40.74% (TTM) — pricing power at work in a market where competing on price is structurally difficult when your competitor literally owns the landfill you need to use. 5

Balance sheet: levered but serviceable

Metric	TTM (Mar 31, 2026)
Cash & equivalents	$158M
Total debt	$22,910M
Debt/Equity	2.28×
Interest coverage	5.26×
Current ratio	0.93×
Goodwill + intangibles	$17,530M
Tangible book value/share	-$18.59
Altman Z-Score	2.95

Source: 6 1

The D/E of 2.28× is the most visible concern here. For context, RSG carries 1.18× and WCN 1.17×, so WM is roughly double its peers on leverage. The practical consequence: interest expense of $912M in FY2025 on $22.9B of debt, covered 5.26× by operating earnings. That coverage is adequate but not comfortable — a meaningful EBIT decline (say, 20%) would compress coverage to ~4×, still serviceable, but with less cushion. 6

Cash on hand of $158M is functionally near-zero relative to the debt load, meaning WM depends on its revolving credit facilities and operating cash flow for liquidity rather than a cash buffer. Given that OCF has been $4.7–6.3B annually, this is manageable — but it leaves no margin for a sudden cash-flow shock.

Goodwill and intangibles total $17.53B (38.4% of total assets), producing the negative tangible book value of -$18.59 per share. In a wind-down scenario, common equity recovery depends entirely on the value of franchise rights, route contracts, and customer relationships — none of which are easily liquidated. This is not unusual for a serial acquirer with strong operating cash flows, but it means traditional book-value-based valuation approaches do not apply here.

The Altman Z-Score of 2.95 sits just below the 3.0 "safe zone" threshold. For a capital-intensive infrastructure business with reliable regulated-like cash flows, this is less alarming than it would be for a manufacturer or retailer. The Z-Score model was calibrated on manufacturing firms; applying it to waste infrastructure tends to produce borderline readings even for financially healthy operators. RSG, which carries similar debt structure, shows a comparable reading. Still worth monitoring. 1

Competitive moat: landfills, route density, and vertical integration

WM's competitive position rests on three structural advantages that are difficult — in some cases legally impossible — to replicate.

Landfill ownership: WM operates the largest private landfill network in North America. Permitting a new municipal solid waste landfill in the U.S. typically takes 7–10 years and faces organized local opposition. Communities that rejected landfill permits in the 1980s and 1990s have, in many cases, never revisited the decision. That supply freeze creates a natural oligopoly: if you need to dispose of solid waste in a given region, your options are usually limited to WM, RSG, or a smaller regional operator. 4

Route density: In high-density urban and suburban markets, WM's collection routes service more customers per mile of driving than a new entrant could achieve — a cost advantage that compounds with every new customer added. A competitor bidding to undercut WM's pricing in WM's core markets faces a structurally higher cost per pickup, which makes underbidding unprofitable on a unit-economics basis.

Vertical integration: WM captures value at every stage of the waste lifecycle — collection fees, transfer fees, landfill tip fees, recycling commodity revenues, and RNG sales from landfill gas. Each stage generates margin; losing one customer to a competitor doesn't necessarily mean losing all five revenue touchpoints if WM still handles transfer and disposal.

Among direct peers, RSG is the closest structural analog (similar route density, landfill ownership, and service mix). WCN, GFL, and CWST are smaller operators growing through M&A — they are consolidating regional markets but remain well below WM's scale and market coverage. 7

Risk factors

Risk 1 — Debt load and rising interest expense. Total debt of $22.9B (D/E 2.28×) generates $912M in annual interest expense, up from $365M in FY2021 — a 2.5× increase in five years. 6 If operating income declined 25% from FY2025 levels (~$850M lower EBIT), interest coverage would compress to roughly 3.9×, and FCF would drop by approximately $640M — still positive, but materially tighter. Investors should track the pace of debt reduction and interest rate exposure on floating-rate tranches over the next two to three years.

Risk 2 — Stericycle integration execution. WM paid $7.5B to acquire Stericycle in Q4 2024, adding healthcare waste management at a meaningful premium. Integration costs are still running through the income statement; the acquisition contributed to the FY2025 net income dip. 5 The key watchpoint is whether Healthcare Solutions margins normalize toward WM's core business margins over FY2026–FY2027. If integration runs longer or costs run higher than guided, EPS estimates for FY2026 (consensus: ~$8.38) could slip.

Risk 3 — Insider selling cluster with very low ownership. Insiders hold only 0.17–0.24% of shares outstanding, and the most recent visible window shows concentrated selling by the President (John Morris, ~$2.98M in March 2026), CFO David Reed, and four other senior executives — all clustered in early March around the $243–245 range. 2 No insider purchases are on record in the same window. Low ownership does not make WM a bad investment, but it removes equity-alignment as a confidence signal. Institutional ownership of 84.72% provides a different form of monitoring. 1

Risk 4 — PFAS and environmental regulatory risk. Per- and polyfluoroalkyl substances (PFAS, often called "forever chemicals") are under increasing EPA regulatory scrutiny. Landfill operators may face mandated liner upgrades, leachate treatment requirements, and groundwater monitoring expansions if proposed rules tighten. The direct cost impact is unquantified in public WM filings, but sector analysts have flagged potential CapEx increases of $500M–$1B+ across the industry over a 5–10-year horizon if full PFAS remediation standards are imposed. No specific litigation against WM was identified in the research window, but the sector-wide regulatory trajectory is a real and open-ended cost item. 2

Risk 5 — Recycling commodity price volatility. WM's Recycling Processing and Sales segment generates revenue by selling recovered paper, plastics, and metals. Commodity prices for these materials swing with global manufacturing demand — a sharp drop in cardboard or aluminum prices compresses recycling margins. The offset is that WM has progressively shifted recycling contracts toward fee-based models (charging customers for processing regardless of commodity prices), reducing exposure; but commodity volatility remains a second-order earnings driver that can add ±$50–100M to net income in any given year.

Near-term catalysts

Q2 2026 earnings — estimated July 27, 2026, after market close. Q1 2026 EPS was $1.34 on revenue of $5.91B. 2 Q2 will be the second full quarter with Stericycle consolidated. Watch for: (1) whether Healthcare Solutions margins are improving vs. the integration-year baseline; (2) organic pricing growth in core collection — WM has historically achieved 4–6% annual pricing increases in contracted routes; (3) any updated guidance on CapEx trajectory and debt reduction pace.

14.5% dividend increase and $3B buyback. On December 15, 2025, WM announced plans for a 14.5% dividend increase — lifting the annual payment to approximately $3.78 per share — along with a new $3 billion share repurchase authorization. 12 The dividend raise signals management's confidence in sustained cash generation; the buyback at current prices ($214.60) would retire approximately 3.4% of outstanding shares at full execution. WM has raised its dividend for 22 consecutive years, currently 3 years short of Dividend Aristocrat status (25 years of consecutive increases). 1

New COO appointment. On May 13, 2026, WM named Tara Hemmer as Chief Operating Officer. 13 Hemmer's appointment as a dedicated COO signals an operational focus as WM integrates the Stericycle acquisition and scales its RNG portfolio.

Renewable Natural Gas (RNG) build-out. WM operates landfill gas-to-energy facilities converting methane from decomposing waste into electricity and pipeline-quality RNG. RNG commands a price premium over conventional natural gas due to Renewable Identification Numbers (RINs) under the EPA's Renewable Fuel Standard. As WM expands its RNG production capacity, this segment could contribute meaningfully to operating cash flow — a long-duration catalyst largely separate from the core collection business.

Stock pulled back 13.5% from 52-week high. The current price of $214.60 is $33.53 below the 52-week high of $248.13, reached in late 2025. Beta of 0.46 makes WM one of the lower-volatility names in the channel's coverage — the pullback is attributable to broader industrial sector weakness and tariff/rate uncertainty, not company-specific deterioration. 2

Decision framework

This is not a buy or sell recommendation. What WM presents is the largest, most profitable operator in a durable oligopoly — the only waste company in the sector with a 30%+ ROE — trading at its lowest EV/EBITDA among direct peers and 4% below its own five-year average P/E.

The bull case rests on: (1) Stericycle integration completes on schedule by FY2026–FY2027, restoring operating margin to 18%+ and reducing drag on EPS growth; (2) the $3B buyback and continued dividend growth (toward Dividend Aristocrat status in 2029) sustain total shareholder return even if the P/E multiple stays flat; (3) RNG production scales into a material revenue line over 3–5 years, adding an energy angle to what is otherwise a purely infrastructure story. On consensus EPS of $8.38 for FY2026, reversion to the five-year average P/E of 32.41× implies approximately $272 — roughly +27% from current levels. On EV/EBITDA, convergence with RSG's 14.83× on the same EBITDA base would imply a similar magnitude.

The bear case requires: interest rates stay elevated longer than consensus expects, preventing meaningful debt reduction and keeping interest coverage compressed; Stericycle integration runs over budget or over time, depressing FY2026 earnings below consensus; and PFAS regulation materializes faster and at higher cost than the current $500M–$1B sector range estimate, requiring accelerated CapEx that crimps FCF. In that scenario, the FCF yield of 3.82% offers limited protection and the P/E discount to history could widen rather than narrow.

The variable investors should focus on at Q2 earnings (July 27) is Stericycle margin progress — specifically Healthcare Solutions segment operating income as a percentage of segment revenue. A sequential improvement from Q1's integration-year baseline would confirm the thesis that FY2025's earnings dip was acquisition-related noise, not a structural margin reset.

Short interest at 1.43% of float is negligible. The 28-analyst Buy consensus with a $256 average target (+19.3% upside) offers a reasonable-case anchor, though analyst targets have historically tracked WM's own history-mean P/E closely. 1

This article is for informational purposes only and does not constitute investment advice. All data sourced as cited; financial figures are as of the dates noted.