Waste Management, Inc. (NYSE:WM) has returned 0.19% during the last six months, as of October 15. This compares to a 21.5% return for the Insider Monkey Billionaire Index and 15.74% for the State Street SPDR S&P 500 ETF Trust.
Waste Management operates in one of those businesses people rarely think about until something goes wrong. Garbage still needs collecting, landfills still need managing, and businesses still need to dispose of waste. That makes WM less vulnerable to changing consumer tastes than many companies. But the more interesting question is whether a business this mature can continue growing fast enough to reward investors buying its shares today.
There are reasons to believe it can. The biggest opportunities, however, aren’t necessarily in collecting more garbage. They’re in making more money from the waste WM already handles.
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A Business With a Hard-to-Replicate Advantage
WM’s biggest strength is its network of landfills, transfer stations, collection routes, and customer relationships. Building a competing network isn’t simply a matter of buying trucks. Landfills require suitable land, permits, substantial investment, and years of planning. In densely populated markets, that infrastructure becomes especially difficult to replicate.
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What makes WM difficult to compete with is the infrastructure it has built over decades. Setting up landfills and building a network of collection routes takes time, money, and permits that aren’t easy to come by. WM can also buy smaller operators and bring them into its existing network, allowing it to expand without having to start from scratch.
The other advantage is pricing power. WM doesn’t need to collect significantly more garbage every year to grow its revenue. It can raise prices, find ways to cut costs, and focus on contracts that offer better returns.
We saw this play out in the second quarter of 2026. Waste volumes came in weaker than expected, forcing management to lower its revenue outlook. Yet WM still managed to expand margins and maintain its full-year earnings and free cash flow guidance. That’s encouraging. It shows the company can protect its profitability even when growth doesn’t go according to plan.
The Growth Story Goes Beyond Garbage Collection
WM has spent years investing in businesses that can extract more value from its existing operations.
Automated recycling facilities are a good example. Better sorting technology can increase throughput and reduce labor costs, helping WM earn better returns even when recycled commodity prices aren’t particularly favorable. The company reported that its recycling automation projects had reduced labor cost per ton by 30% compared with older facilities.
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WM is also looking to get more out of its landfills through renewable natural gas. It captures the gas produced by decomposing waste and converts it into fuel, giving the company another way to make money from its existing operations. This business has room to grow, but how much it contributes will depend on energy prices, government incentives, and how quickly WM can get its new facilities up and running.
Then there’s Stericycle, WM’s healthcare waste and compliance business. The acquisition gives WM exposure to a different set of customers and services, with opportunities to cross-sell and cut overlapping costs. Integration took longer than management initially expected, but the company said in its latest quarterly call that the business was largely integrated. The next test is whether those improvements translate into sustained revenue growth and better margins.
These businesses may not turn WM into a high-growth company overnight, but they give it more ways to grow earnings over time without having to rely on collecting more waste.
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Is the Stock Worth Its Premium?
WM trades at 29.4x trailing earnings and 22.52x forward earnings. That is not a bargain valuation for a company whose core business is growing modestly, particularly when volume trends remain uneven. At the same time, it is relatively reasonable, considering its moat and therefore its long runway.
The valuation comparison with its competitors is interesting. Republic Services trades at 30.18x trailing earnings and 26.32x forward earnings. Waste Connections is more expensive on trailing earnings at 37.54x, but its forward P/E of 18.08x is cheaper in comparison. Clean Harbors trades at higher multiples than WM, while GFL Environmental is considerably more expensive.
WM’s valuation is pretty much in line with Republic Services, but Waste Connections looks cheaper based on forward earnings. That doesn’t automatically make it the better buy, though. Investors may be expecting different levels of growth from each company, and their earnings and debt levels also differ. So while the P/E ratios are a useful starting point, there’s more to consider before deciding which stock offers the better deal.
WM’s appeal comes down to its ability to generate steady cash flow, raise prices, and get more out of its existing operations. Its investments in automation, renewable natural gas, and healthcare waste services could give earnings another leg to grow.
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Conclusion
WM still has room to grow, though the market does not expect it to turn into a high-growth business. Its existing network gives it a strong advantage, and businesses like recycling, renewable natural gas, and healthcare waste services could add to its growth over time. At 22.52x forward earnings, WM could make sense for investors looking for a business that can compound steadily over the long term.
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Market Sentiment
Waste Management was held by 64 hedge funds with a combined stake value of about $7.66 billion at the end of Q2 2026 in the Insider Monkey database. This is up from 61 hedge fund holders in the previous quarter, although the cumulative value of their investments declined from around $7.99 billion.
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This article is originally published at Insider Monkey.
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