Waste Management (WM)
Industrial / Servicios ambientales
North America's leading environmental solutions provider compounds an essential-infrastructure business protected by landfill scarcity and vertical integration, with three smaller lines of a different nature (recycling, renewable energy, and healthcare services) still maturing on margin following the Stericycle acquisition.
- Price
- $223.14
- Intrinsic value (5y, base)
- $246
- Total annual return (5y)
- 4.0%
- Status (nominal)
- Fairly valued
- Margin of safety
- No margin
The essentials
- Leading physical network in North America: 257 landfills and 342 transfer stations, with waste internalization that rose from 71.3% to 72.4% over the half-year.
- The Stericycle acquisition (Healthcare Solutions, November 2024) still operates at a negative operating margin while systems integration and cost synergies are completed.
- 2026 revenue guidance ($26.275-26.475 billion, +4.6% over 2025) anchors the first year of the path; the company resumed share buybacks in 2026 after pausing them almost entirely in 2025.
Intrinsic value — two valuation methods
Total return at 5 years: 4.0%/year = 2.0% appreciation + 2.1% dividend. The target price ($246) is ex-dividend; the $24 in dividends collected over 5 years are added separately.
By both methods, the value today (DCF $195 · Multiples $218) is below the market price ($223).
Pillars of the analysis
The verdict — today vs 5 years
Today — expensive, no margin of safety: at $223 trades ~2.2% above its value discounted to today (~$218); the expected return does not even reach the risk-free rate (4.5%).
At 5 years — En valor: the target price ($246) plus dividends yield between the 4% floor and the 10% average return — a reasonable return, though without the margin of a great investment.
The bridge: the return at 5 years falls below the risk-free rate (4.5%) — which is why there is not even a discount to today's value. To require a 15% annual return, it would need to be bought at ~$138.
Thesis
The business
Essential infrastructure with a genuine moat at its core (landfill scarcity, vertical integration, scale) combined with three smaller businesses of uneven quality: Renewable Energy grows with a good margin, Recycling Processing and Sales depends on recycled commodity prices, and Healthcare Solutions is still integrating the Stericycle acquisition with a negative operating margin.
The valuation
It is valued by sum of the parts: each segment with its own EV/EBIT multiple over the band that corresponds to its nature (waste, commodities, regulated energy, industrial), not a single multiple over the consolidated figure. The 5-year value in the base scenario is $246 per share, versus the current price of $223, implying an annualized total return of +4% including dividend.
The margin of safety
It trades close to intrinsic value, far from the required margin of safety. The verdict is Fairly valued: at market price, the margin versus the maximum price compatible with a 15% annual return is -62%.
What to watch
The central disconfirmer is the integration of Healthcare Solutions: if the segment's operating margin does not turn positive over the next fiscal years, the sum-of-the-parts thesis loses an entire piece of value and the consolidated business would keep performing below what the core collection-and-disposal business suggests.
Educational / informational. Does not constitute investment advice.