Why Waste Management Stock Is Drawing Attention Now

Waste Management (WM) is back on investor radars after recent share performance, with a small 1 day gain alongside declines over the past week and month creating fresh interest in its long term record.

At around US$224 per share, WM’s recent 1 day share price gain sits against weaker 7 and 30 day share price returns. Longer term total shareholder returns over 3 and 5 years remain materially higher, suggesting shorter term momentum is fading after a stronger multi year run.

If this shift in momentum has you thinking about where else to put fresh capital to work, it may be worth scanning opportunities in companies exposed to long term infrastructure and electrification spending via the 33 power grid technology and infrastructure stocks

With WM trading near US$224 and carrying both an estimated intrinsic discount and room to its current analyst price target, the key question is whether the recent pullback offers value or if the market already reflects future growth.

Most Popular Narrative: 11.4% Undervalued

At a last close of $224.18, the most followed narrative places Waste Management’s fair value at $253.12. This points to a valuation gap that hinges on specific growth and margin assumptions.

The company's strategic investments in sustainability, particularly in the areas of recycling and renewable energy, are showing strong, high return growth, which could drive future revenue increases. The integration and optimization of WM Healthcare Solutions are on track to deliver significant synergies, anticipated to reach $250 million annually by 2027, positively impacting earnings.

Curious what kind of revenue run rate and margin profile need to line up to justify that fair value, and how rich a future earnings multiple the narrative is leaning on to get there.

At the core of this view sits a blend of steady top line expansion, gradually higher profitability and an earnings base that is expected to compound far enough to support a premium earnings multiple, all discounted at 7.25% in the Simply Wall St model.

Result: Fair Value of $253.12 (UNDERVALUED)

However, this hinges on tax credits and regulatory support holding up, while higher leverage from the Stericycle deal leaves less room if integration or cash flows disappoint.

Next Steps

With both optimism and concern in the mix, it helps to move quickly and stress test the story for yourself using the 3 key rewards and 2 important warning signs

Ready to hunt for your next opportunity?

If WM is just one piece of your portfolio puzzle, you may want to broaden your watchlist now with a focused search for quality, income and resilience built from the screener results.

• Consider resilient businesses that aim to keep downside in check by reviewing the 72 resilient stocks with low risk scores.
• Identify companies that combine quality metrics with appealing entry prices using the 63 high quality undervalued stocks.
• Support your income stream by scanning for reliable payers in the 13 dividend fortresses.

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.