Waste Management (WM) Could Be 16% Undervalued As CEO Succession Comes Into View

CEO transition puts Waste Management stock in focus

Waste Management (WM) disclosed that long serving CEO James C. Fish, Jr. will retire and leave the Board in early 2027, with President John J. Morris, Jr. set to assume the top roles.

This planned succession, announced alongside a regular quarterly dividend declaration, gives investors a clearer view of future leadership and prompts a closer look at how the stock aligns with individual income and stability goals.

Over the past year Waste Management’s share price has been relatively steady, with a 90 day share price return of 3.65% and a year to date share price return of 0.58% as the stock trades around $219.66. The 3 year total shareholder return of 46.48% points to stronger longer term compounding, even though the 1 year total shareholder return has edged down 1.42%. This suggests momentum has cooled slightly as investors absorb the CEO transition and recent dividend announcements.

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With Waste Management shares near US$219.66 after a muted year, some investors may prefer to wait for a pullback, while others see the CEO transition as already reflected in the price. How does today’s valuation stack up?

Most Popular Narrative: 16% Undervalued

The most followed narrative currently places Waste Management's fair value at $260.64, comfortably above the last close of $219.66. This frames the CEO transition against a valuation gap that some investors will notice.

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.

Read the complete narrative.

Want to see what bridges that valuation gap? The narrative leans on steady revenue expansion, rising margins and a premium profit multiple tied to these cash flow expectations. Interested in how those moving parts add up to that fair value.

Result: Fair Value of $260.64 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, investors still need to watch for pressure from regulatory changes around renewable energy and recycling, as well as any setbacks in integrating WM Healthcare Solutions that strain cash flows.

Find out about the key risks to this Waste Management narrative.

Another view on Waste Management’s valuation

The first narrative leans on growth and future earnings to argue that Waste Management is undervalued. On current numbers, though, the stock trades on a P/E of 30.8x versus 18.3x for the wider US Commercial Services industry and a fair ratio of 26.9x. This points to a richer entry point and potential valuation risk if expectations ease.

For investors who prefer to focus on today’s earnings multiples rather than long range forecasts, this gap is a reminder to weigh the price being paid against both peers and the fair ratio. It also prompts the question of what would need to go right for the stock to keep justifying this premium.

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Given the mixed signals around Waste Management's valuation and CEO transition, it makes sense to check the underlying data yourself and to move quickly to form your own stance by reviewing the 4 key rewards and 1 important warning sign.

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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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