Waste Management (WM): fair value

Fair-value band

The normal range for this name runs from $203 (cheap) to $297 (expensive); it is now priced at $226.

That is 0.8σ below this name's own normal premium.

Is Waste Management undervalued?

Fair, relative to its own history. Waste Management trades at $226, 6% above the fair value this model estimates, but it has habitually traded 17% above fair value, and today's gap is 0.8σ below that norm, within the range it normally trades in, so the verdict is Fair: priced normally for itself, not necessarily fairly valued.

Diligence checklist

7 pass · 3 fail · 1 no data

• PASSCash actually collected from profit, last 12 months: 204%XBRL · Waste Management gets $2.04 of real cash for every $1 of reported profit which means profits are real and not just numbers on paper. That's a good sign.
• FAILGap between paper profit and real cash: -8.0%XBRL · Waste Management collected more cash than it booked as profit, by 8.0% of everything it owns. That is the conservative direction, but it is far enough past my 5% line to flag: a gap this wide usually means something large and non-cash is running through the earnings, and I want to know what it is before I trust the profit figure.
• FAILDebt compared to one year of cash earnings: 3.47xXBRL · It would take 3.47 years of earnings to clear what Waste Management owes, net of the cash it holds. Past three years I stop treating a name as something I would buy, and past four I stop work altogether. This sits in between: not disqualifying, but the lenders have more say in how this business is run than the shareholders do.
• PASSHow much more it earns on capital than that capital costs: +0.28ppXBRL · Waste Management earns 0.3 points more on the capital it employs than that capital costs. That clears the bar, but only just: a slightly worse year or a slightly higher cost of money and this business is running to stand still. The gap is no wider than it was at the start of the window.
• PASSStock sold by executives and directors on the open market, last 6 months: $0.9MEDGAR · Insiders at Waste Management sold $0.9M of stock on the open market in the last 6 months, which is inside the $5 million line I draw. Selling that size is ordinary diversification rather than a signal about the business. The sellers: Carrasco Rafael $0.6M, Carroll John A. $0.3M. Options being exercised, and shares held back to cover the tax on them, are not sales and I don't count them either. filing ↗
• PASSHow long the CEO has run this company: 9.9 yearsTEXT · Waste Management's chief executive has held the job since November 17, 2016, which is 9.9 years and covers a full cycle: good years and bad ones, both on this person's record. That is long enough for the record to mean something. Time served isn't the same as doing the job well, though, so read this next to the return-on-capital line above, which covers the same years. filing ↗
• PASSProfit margin held up during the last sales slump: 37.2% vs 34.8% baseXBRL · The last time Waste Management's revenue fell, its profit margin per unit sold only slipped a little, from about 34.8% to 37.2%. It means Waste Management isn't being forced to cut prices to keep product moving, which is what a company with a weak competitive position has to do. This is the accounts talking, not the filing: I'm reading the 5 quarters from March 2015 to March 2016, measured against the year going into it, and a shift in what the company sold can imitate pricing power either way.
• FAILNormal profit margin across a full business cycle: FCF margin 13.9% vs 10.0% medianXBRL · Waste Management is earning a 13.9% cash margin against a long-run average of 10.0%, 39% better than normal. This is what a cycle peak looks like, and paying for peak margins as though they were permanent is the classic way to overpay for a good business. My valuation grows the average instead. Across the window the margin ran between 7.5% in March 2023 and 14.9% in September 2021.
• N/AHow much of the stock trades on an average day: $473MMARKET · Waste Management trades about $473M of stock a day. Taking a fifth of that for ten sessions, I could build or exit roughly $945M without leaning on the price. There's no pass or fail here because the answer depends on how big a position I'd actually want to take.
• PASSShare of revenue from its single biggest customer: 5%TEXT · Waste Management's February 9, 2026 10-K names a customer at 5% of revenue, in its own words: "During 2025, our largest customer represented less than 5% of annual revenues". That's inside the quarter-of-revenue line where I stop work, but it is worth knowing whose buying decision moves the top line. filing ↗
• PASSWhether the company switched auditors in the last 2 years: noneEDGAR · Companies sometimes switch accounting auditors right before something bad is uncovered which can be a warning sign. Waste Management hasn't changed auditors in the last 2 years, so there's no such red flag here.