Waste Management Inc (WM) stock analysis

P/E below its 5-year median

Waste Management's P/E of 31.5 is below its own 5-year median of 33.5.

P/E above the industry

Waste Management's P/E of 31.5 is above the Electric, Gas, and Sanitary Services median of 20.2.

EV/EBITDA below its 5-year median

Waste Management's EV/EBITDA of 15.3 is below its 5-year median of 16.1.

P/B above the industry

Waste Management's price-to-book of 9.68 is above the Electric, Gas, and Sanitary Services median of 3.97.

Trading above fair value

The share price of $240.29 is above our fair value estimate of $197.04.

Margin of safety under 20%

The price is 21.9% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 8.6% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 7.5% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 19.7% over the last twelve months, against a 5-year average of 12.6% a year.

Growing slower than the industry

Revenue grew 5.2% over the last twelve months; the Electric, Gas, and Sanitary Services median is 5.5%.

Guidance raised

Waste Management raised its full-year adjusted operating EBITDA outlook on Oct 27, 2026.

Gross margin slipping

Gross margin was 40.4% over the last twelve months, against 40.4% a year earlier.

Return on equity over 15%

Return on equity was 31.7% over the last twelve months and averaged 31.3% over five years.

Return on capital over 10%

Return on invested capital was 11.5%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Waste Management's return on equity of 31.7% is above the Electric, Gas, and Sanitary Services median of -16.5%.

Earnings grew over 5 years

Net income grew 12.6% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 11.8% over the last twelve months, against a 5-year average of 11.2%.

Net margin above the industry

Waste Management's net margin of 11.8% is above the Electric, Gas, and Sanitary Services median of -6.7%.

High debt

Debt is 237% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 185% five years ago to 237%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 28.1% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets don't cover short-term debts

Current assets are 0.82 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.99; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Waste Management paid dividends worth 1.5% of the share price over the last twelve months.

Yield below Treasuries

The 1.5% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Waste Management yields 1.5%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 48.0% of net income.

Covered by free cash flow

Dividends take 39.4% of free cash flow.