Waste Management’s stock price remained in a tight range after the company published its financial results. WM was trading at $227.90, down by 5.7% from its highest point this year, giving it a market capitalization of over $92 billion. 

Waste Managent is still growing

Waste Management, the biggest player in the waste collection industry, published strong financial results that demonstrated its continued growth. 

Its annual revenue has jumped from $15.2 billion in 2020 to $22 billion in the last financial year. This growth was driven by its organic performance and strategic acquisitions, such as the recent buyout of Stericycle.

Its financial results showed that Waste Management’s business was continuing. It had a reported revenue of $6.43 billion in the second quarter, up from $5.4 billion in the same period last year. 

Waste Management’s operating EBITDA rose to $1.85 billion from $1.5 billion, while its net income jumped to $726 million. In a statement, its CEO said:

“Our Collection and Disposal business produced robust organic revenue growth and margin expansion, achieving the Company’s best-ever operating expense margin. We also grew operating EBITDA by double digits in both our Recycling Processing and Sales and WM Renewable Energy segments.”

Waste Management’s revenue was driven by the Stericycle buyout, which made it a major player in the healthcare waste management industry. Its healthcare solutions business made $646 million. 

WM to benefit from rising tailwinds

It hopes that the healthcare division will benefit from the tailwinds in the healthcare sector like the aging population, increasing chronic conditions, and rising hospital occupancy. 

These issues mean that medical waste will outpace traditional solid waste volume trends. Its Stericycle buyout is expected to lead to $250 million in synergies.

Waste Management also believes that its business is uniquely positioned as the number of landfills in the US falls. It expects that over 400 landfills will close in the next 15 years, with 150 million tons of capacity going offline by 2040.

At the same time, the company is improving its margins through automation. It is doing that by automating its recycling facilities, embracing autonomous vehicles, and streamlining its logistics.

Valuation concerns remain

Waste Management has been a good investment in the past decades as the company has continued to grow. It also benefits as being the market leader in the $125 billion industry, with its competitors like Republic Services and Waste Connection being further behind.

Read more: Waste Management is a good stock; but Republic is even better

However, there is a risk to the company’s valuation, with its forward price-to-earnings ratio of 30 being higher than the sector median of 20. Its forward EV-to-EBITDA of 15.4 was higher than the median of 12. These are huge numbers for a company in an unglamorous industry.

Waste Management stock price technical analysis

WM stock price chart | Source: TradingView

The daily chart shows that the WM stock price has been in a strong bull run in the past few years, moving from a low of $145 in September 2023 to $241. 

It has formed an ascending channel, connecting higher highs and higher lows since June 2024. It is now consolidating at the 50-day and 100-day Exponential Moving Averages (EMA).

The stock’s outlook is neutral for now. A drop below the lower side of the ascending channel will point to more downside, potentially to a low of $213, its lowest point on April 8. On the flip side, the stock will likely rebound and it the upper side of the channel at $240. 

Read more: Waste Management: future dividend aristocrat, all-weather stock

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