Has the Market Already Priced In Waste Management’s Recycling Push and Steady 2025 Gains?

• For investors wondering whether Waste Management is still attractively priced at around $218 a share or whether much of the opportunity has already been realized, this article will walk through what the numbers indicate about its valuation.
• The stock has gained 1.3% over the last week and 1.2% over the last month, and is up 8.9% year to date, adding to a track record of 7.6% over 1 year, 43.7% over 3 years, and 101.9% over 5 years.
• Recent headlines have highlighted Waste Management's continued investments in recycling and sustainability initiatives, along with long term infrastructure projects that aim to support stable cash flows and pricing power. At the same time, the company has attracted attention for its capital returns to shareholders through dividends and buybacks, reinforcing its appeal as a defensive compounder.
• On our framework, Waste Management scores a 3 out of 6 valuation checks. This suggests the stock looks reasonably priced in some areas but appears stretched in others. We will unpack that using multiple valuation approaches, before finishing with a more holistic way to think about what the market is really paying for.

Waste Management delivered 7.6% returns over the last year. See how this stacks up to the rest of the Commercial Services industry.

Approach 1: Waste Management Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates a company’s worth by projecting the cash it can generate in the future and discounting those cash flows back to today’s value. For Waste Management, the model uses a 2 stage Free Cash Flow to Equity approach built on cash flow projections.

The company generated trailing free cash flow of about $2.37 billion, and analysts expect this to rise steadily as operations scale. Simply Wall St combines analyst estimates for the next five years with extrapolated growth thereafter, projecting free cash flow to reach roughly $5.36 billion by 2035. These future cash flows are then discounted back into today’s dollars and summed to arrive at an estimated intrinsic value.

On this basis, Waste Management’s DCF fair value is about $242.89 per share, compared with a current market price around $218. That implies the stock trades at roughly a 10.1% discount to its modeled intrinsic value, which some investors may interpret as a modest margin of safety for long term holdings.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Waste Management is undervalued by 10.1%. Track this in your watchlist or portfolio, or discover 918 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Waste Management.

Approach 2: Waste Management Price vs Earnings

For a consistently profitable company like Waste Management, the Price to Earnings ratio is a practical way to gauge valuation because it links what investors pay today with the earnings the business is already generating. In general, faster growing, lower risk companies can justify a higher PE ratio, while slower growing or riskier firms deserve a lower one, so context is crucial when deciding what counts as a fair multiple.

Waste Management currently trades on a PE of about 34.3x. That is well above the Commercial Services industry average of roughly 23.8x, but below the peer group average of around 46.8x. This suggests investors already pay a premium for its quality and resilience. Simply Wall St also calculates a proprietary Fair Ratio of 35.4x, which reflects what the PE should be given Waste Management’s earnings growth outlook, margin profile, industry positioning, market cap and specific risk factors.

This Fair Ratio is more informative than a simple peer or industry comparison because it adjusts for how different Waste Management really is from the typical company in its space. With the stock trading close to its Fair Ratio, the current PE suggests the shares are reasonably valued on an earnings basis.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1466 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Waste Management Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Waste Management’s future to concrete numbers and a fair value estimate. A Narrative is the story you believe about a company, translated into assumptions for future revenue, earnings and margins, which then flow through to a forecast and an implied fair value. On Simply Wall St, Narratives are an easy, accessible tool on the Community page, used by millions of investors to compare their story for a company with others.

Each Narrative continuously links three pieces together: what you think Waste Management will achieve operationally, what that means for its financials, and what a fair value should be. It then compares that fair value to today’s share price to help you decide whether to buy, hold or sell. Narratives are updated dynamically as new information like earnings or news drops in. For example, some Waste Management Narratives assume technology and pricing will justify values closer to 277 dollars per share, while more cautious Narratives, focused on regulation and leverage risks, point to numbers nearer 198 dollars.

Do you think there's more to the story for Waste Management? Head over to our Community to see what others are saying!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com