Waste Management (WM) just cut its revenue outlook in response to softer demand, a cautious signal that lands alongside stronger free cash flow and a higher dividend yield now drawing fresh investor scrutiny.
Over the past few months, Waste Management has seen momentum cool, with the share price down about 9% over 90 days and 3% year to date. Even so, the 3 year total shareholder return of roughly 39% and 5 year total shareholder return of about 44% keep the longer term story intact.
Spot 32 resilient stocks with low risk scores that, like Waste Management, pair resilient cash generation with comparatively lower risk profiles when markets start questioning near term revenue strength.After a reset on revenue expectations and a pullback in the share price, Waste Management now trades with stronger free cash flow support and a richer dividend yield. Does that setup still offer an appealing entry on valuation?
Most Popular Narrative: 19% Undervalued
The most followed narrative on Waste Management values the shares at $259.92, above the recent $211.83 close, framing the pullback as a discount to that fair value estimate based on a 7.29% required return.
The main thing that has to go right is that Waste Management turns its large investments in healthcare solutions, recycling automation and renewable natural gas into sustained cross sell, synergy capture and free cash flow conversion, now that major capex is largely complete.
The current valuation implies the share price does not fully reflect a business that is growing operating EBITDA, expanding margins, lifting free cash flow conversion toward the high 40s% to low 50s% range and benefiting from scarce disposal and energy assets.
See why 91 investors see Waste Management as 19% undervalued.
Result: Fair Value of $259.92 (UNDERVALUED)
Still, the Waste Management story depends on alternative fuel tax credits holding up and Stericycle synergies arriving on schedule, which could both prove less supportive than expected.
Find out about the key risks to this Waste Management narrative.
Next Steps
Mixed signals around Waste Management can create noise, so review the full picture promptly and weigh both sides of the argument using 5 key rewards and 1 important warning sign.
Looking for more investment ideas beyond Waste Management?
If Waste Management is on your radar, consider broadening your opportunity set with a few targeted stock ideas that align with different goals before the next move arrives.
- Explore long term compounding potential by scanning for quality companies trading below estimated value through the 32 high quality undervalued stocks.
- Review potential income streams by focusing on companies with stronger yields and resilient payout histories via the 8 dividend fortresses.
- Emphasize capital preservation while still seeking upside by concentrating on businesses that qualify for the 32 resilient stocks with low risk scores.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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