Waste Management, Inc. (NYSE:WM) operates the largest network of permitted solid waste landfills in North America. Strict environmental regulations and intense community opposition make permits nearly impossible to obtain, so WM’s existing capacity only becomes more valuable. At about $204 a share and $82 billion in value, WM trades near 29 times earnings, roughly 18% below its high. Current valuation levels reflect market expectations that an irreplaceable asset, plus steady price increases, will keep compounding and justify a premium. On the other hand, the industry could be reaching its maturity.
The Pricing-Power Math
The difficulties in building new landfills mean less competition and that WM can raise prices faster than inflation year after year. In the latest quarter, it lifted core price about 5.7%, well above inflation, while its disposal volumes stayed steady. This is the kind of pricing power usually seen in utilities. In addition to standard collection and disposal, the company captures naturally generated landfill methane, purifies it into renewable natural gas, and sells it directly into pipeline grids. Management expects renewable energy and automated recycling operations to generate roughly $1 billion in incremental EBITDA by 2027. The company is also integrating Stericycle to establish a presence in regulated medical waste. Looking to invest in healthcare? Then check out which healthcare stocks hedge funds are piling on. At 29 times earnings, WM’s investors are underwriting both consistent core price increases and timely execution on these sustainability projects.
The Bull Case
Here is the case for the buyers. The bulls see strong durability in the moat. New landfill capacity is nearly impossible to manufacture, allowing WM to enjoy strong pricing power. Additionally, demand for waste pickup barely blinks in a recession, which makes earnings steady and predictable. The renewable-gas and recycling investments add further growth to the company’s progress, while the Stericycle deal opens a large new medical-waste market for WM. The company also pays a growing dividend and buys back stock on strong free cash flow. That combination of clean balance sheets and self-funded payouts is rarer than most investors assume. We screened the market for the 10 stocks with low debt and strong free cash flow that share it.
The Bear Case
The bears argue that 29 times earnings are elevated for a business expanding underlying revenue at low-to-mid single digits. The core business grows slowly, and much of WM’s appeal is its steady, bond-like payout, so higher-for-longer interest rates can weigh on the multiple as safer yields compete. The growth extras carry their own risks: recycling profits swing with volatile commodity prices, and the economics of renewable gas depend on contract prices and government credits that can change. WM already trimmed its revenue outlook this year on weaker volumes and delayed gas-plant connections. Meanwhile, the Stericycle integration still must prove out.
The Bottom Line
So, weigh one question: do renewable gas and the Stericycle medical-waste push add enough growth to the steady landfill base to justify 29 times? For the bulls, those newer arms are the swing factor, since the core alone grows only mid-single digits. For the bears, 29 times is reasonable only if you prize the moat’s durability. An income investor gets a dependable, rising dividend, though the 1.8% yield is modest. The landfill moat may be the most durable in the market, yet the premium already reflects much of that quality.
Market Sentiment
According to Insider Monkey’s database, 64 hedge funds held Waste Management, Inc. at the end of the second quarter of 2026, up from 61 the quarter before. The value of those combined holdings edged down over the same period, from about $8.0 billion to roughly $7.7 billion.
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This article is originally published at Insider Monkey.
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