WM changes
Pick any two versions below to diff them.
- Price
- $221.30 → $240.29(+8.6%)
- Discount category
- Close to intrinsic value → Pricey
- Next earnings
- Oct 27, 2026 → Jan 27, 2027
- Next earnings is estimate
- No → Yes
- Thesis
- Waste Management is priced the way a steady compounder usually is, meaning the market is not pricing in a big problem. A compounder is a company that steadily grows earnings over many years. Instead the market is pricing in two near-term questions. One is whether Healthcare Solutions, built from the 2024 Stericycle purchase, can removed: grow added: keep its revenue removed: again added: growing while it delivers its planned savings. The other is whether two leadership changes close together, a new CFO in late 2025 and a new CEO taking over in January 2027, go smoothly. For the gap to close, Healthcare Solutions revenue needs to removed: grow again. added: keep growing. Management targets more than $300 million of synergies by the end of 2027, about $250 million of cost savings and about $50 million from selling more services to the same customers. These synergies need to show up in the numbers. Incoming CEO John Morris needs to keep the operating momentum management built over the last decade. WM's core waste and recycling business keeps growing EBITDA, a measure of operating profit, and free cash flow faster than revenue. This gives management room to work through these transition risks without hurting the dividend or the buyback plan. removed: The next earnings report, due October 27, added: In Q3 2026, removed: should show whether Healthcare Solutions revenue removed: grows again after management trimmed added: grew 3.7% to $651 million, and its operating EBITDA rose more than 30%. The Q4 2026 removed: revenue guidance added: report and the 2027 guidance, expected in removed: July on lower volumes. added: late January 2027, show whether this growth continues. John Morris takes over as CEO on January 4, 2027. The following two to four quarters should show whether that handoff and the Healthcare Solutions turnaround stay on track. Even a small miss on either point could keep the stock from moving to a higher valuation.
- Risks
- Healthcare Solutions, the segment built from the 2024 Stericycle acquisition, has revenue below plan. Its revenue was removed: $1,252 added: $1,903 million in the first removed: half added: nine months of 2026, removed: down added: up from removed: $1,265 added: $1,893 million a year earlier, while management had guided to about 3% growth for 2026. removed: Management says added: Revenue grew 3.7% in Q3 2026 after a decline in the removed: synergies are on track for added: first half. Management targets more than $300 million added: of synergies by the end of 2027, removed: but added: and the segment needs revenue growth to meet its plan. WM already trades close to its estimated intrinsic value. This leaves little room for error. If growth or margins disappoint, the stock has less of a cushion than a more deeply discounted pick would. Recycling profit depends on prices for paper, plastic, and other recovered materials that WM does not control. Management estimates that a $10-per-ton move in the blended single-stream recycled-commodity price changes operating EBITDA by about $27 million. WM is going through two senior leadership changes close together. CFO David Reed started in November 2025, and CEO Jim Fish is retiring, with John Morris taking over in January 2027. Two transitions this close together add execution risk. New state rules on PFAS chemicals in landfills, plus rising fuel and labor costs, could raise WM's operating expenses faster than its pricing can offset them.
- Balance sheet
- Cash: removed: $557M added: $247M Debt: $23.4B Net debt: removed: $22.8B added: $23.1B Net debt / EBITDA: 2.8× (medium) removed: Undrawn credit line: $2.2B, to May 2029 Debt due within 12 months: removed: $3.8B added: $1.5B Ratings: S&P A-, Fitch A-, Moody's A3 WM funds its trucks, landfills and acquisitions with unsecured debt that the parent company issues and its subsidiary WM Holdings guarantees. WM targets total debt of 2.5 to 3.0 times EBITDA, as its credit agreement defines it, so leverage leaves less room for another large acquisition. WM borrowed about $5.2 billion to pay for the Stericycle purchase in November 2024. Total debt was $16.2 billion at the end of 2023. At removed: June added: September 30, 2026, added: total debt was added: $23.37 billion, of which $1.52 billion was the current portion, and cash was $247 million. At June 30, 2026, the debt included $17.5 billion of US senior notes at an average rate of 4.27%, due through 2054, removed: and $0.8 billion of Canadian notes. WM redeemed $0.35 billion of these Canadian notes in July 2026. It also included $2.8 billion of tax-exempt removed: bonds, $1.3 billion of finance leases added: bonds and removed: other debt, and $1.1 billion of commercial paper. removed: The amount due within 12 months includes debt that must be repriced. This is mostly $2.0 billion of tax-exempt bonds whose interest periods end, and commercial paper that WM removed: rolls over. The undrawn credit is the unused capacity of added: also has a $3.5 billion revolving credit line. The leverage ratio uses the $8.15 to $8.25 billion of adjusted operating EBITDA that WM expects for 2026. The ratings are from the October 2024 note issue. Net interest expense was removed: $458 added: $695 million in the first removed: half added: nine months of 2026. added: At June 30, 2026, WM also removed: owes added: owed $3.6 billion to close and monitor landfills and to clean up sites. This long-term cost does not show as debt. removed: WM guides 2026 free added: Free cash flow removed: at added: was $3.01 billion in the first nine months of 2026, and WM expects the high end of its $3.75 to $3.85 removed: billion, so it can pay added: billion guidance for the year. This pays its $3.78 per share dividend and removed: keep buying back stock. added: its planned $2 billion of share buybacks in 2026. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- Oct 27, 2026: Q3 2026 earnings: Healthcare Solutions revenue and synergies. removed: Pending. added: Passed. Watch: Healthcare Solutions revenue growth, synergies on track and EBITDA guidance of $8.15 to $8.25 billion kept pass; another revenue cut or lower EBITDA guidance fails. added: Outcome: Healthcare Solutions revenue grew 3.7%, and WM affirmed its EBITDA guidance and expects revenue at the high end of its range. Jan 4, 2027: John Morris becomes CEO. Pending. Watch: A smooth handover with no change to strategy or financial targets passes; senior departures or a strategy reset fails. Jan added: 27, 2027 (estimate): Full-year 2026 results and 2027 guidance. Pending. Watch: 2026 free cash flow of $3.75 to $3.85 billion and 2027 guidance for EBITDA growth with synergies on track for more than $300 million by the end of 2027 pass; a miss or weak 2027 outlook fails.
- Recent events
- added: Oct 27, 2026: WM reported Q3 2026 results. Revenue grew 6.3% to $6.85 billion. Adjusted operating EBITDA grew 5.8% to $2.12 billion, a 31.0% margin. Healthcare Solutions revenue grew 3.7% to $651 million, and its operating EBITDA rose more than 30%. Free cash flow in the first nine months was $3.01 billion, up 42%. WM affirmed its 2026 guidance and expects revenue and free cash flow at the high end of their ranges. Aug 26, 2026: Jim Fish announced he will retire as CEO after more than a decade in the role and over 25 years at WM. The board named President John Morris as his successor, effective January 4, 2027. Fish stays as an adviser until mid-February 2027. Jul 28, 2026: WM reported Q2 2026 results. Revenue grew 4.0% to $6.68 billion. Adjusted operating EBITDA grew 5.5% to $2.07 billion, a 30.9% margin. Free cash flow grew 35% to $1.10 billion. Management trimmed full-year revenue guidance to $26.275-$26.475 billion on lower volume expectations, but kept its EBITDA and free cash flow guidance unchanged. Healthcare Solutions revenue fell to $638 million from $646 million a year earlier. May 13, 2026: WM promoted Tara Hemmer, its Chief Sustainability Officer, to Executive Vice President and Chief Operating Officer. Rafael Carrasco, the head of Healthcare Solutions, retired on July 17, 2026, and the segment now reports to President John Morris. Jan 28, 2026: WM reported Q4 and full-year 2025 results. Full-year revenue was $25.2 billion. Full-year adjusted operating EBITDA grew 15.5% to $7.58 billion, a 30.1% margin, its best-ever adjusted margin. Management guided 2026 revenue to $26.425-$26.625 billion and free cash flow to $3.75-$3.85 billion. Dec 15, 2025: WM's board approved a planned 14.5% increase in the 2026 dividend rate, to $3.78 per share per year, the 23rd straight year of increases, and a new $3 billion share buyback authorization that replaces the prior program. Nov 1, 2025: David Reed became WM's Chief Financial Officer, succeeding Devina Rankin, who left after 23 years at the company.