Investment Thesis
Waste Management demonstrates solid operational profitability with 17.1% operating margins and strong free cash flow generation of $2.8B, supporting its capital-intensive business model. The 14.2% revenue growth outpaces typical waste industry trends, indicating market share gains or pricing power, though the company carries significant leverage that warrants monitoring.
WM Strengths
- Strong operational efficiency with 17.1% operating margin and 10.7% net margin
- Robust free cash flow generation of $2.8B (11.2% FCF margin) enabling dividends and debt reduction
- Excellent returns on equity (27.1%) and interest coverage (8.6x) indicating profitable capital deployment
- Significant revenue growth of 14.2% YoY suggesting pricing power or volume expansion in essential services
WM Risks
- High financial leverage with 2.22x debt-to-equity ratio and $22.2B long-term debt limiting financial flexibility
- Weak liquidity position with 0.89x current ratio indicating potential near-term refinancing needs
- Capital intensity requiring $3.2B annual capex to maintain competitive operations and service debt
- Net income essentially flat YoY despite revenue growth suggesting margin compression or rising costs
Key Metrics to Watch
- Operating margin sustainability amid inflationary labor and fuel costs
- Free cash flow conversion and allocation between debt reduction and shareholder returns
- Current ratio improvement and gross margin trends to assess pricing power retention
- Capital expenditure efficiency and return on incremental capex deployment
WM Financial Metrics
Revenue
$25.2B
Net Income
$2.7B
EPS (Diluted)
$6.70
Free Cash Flow
$2.8B
Total Assets
$45.8B
Cash Position
$201.0M
WM Profitability Ratios
Gross Margin
N/A
Operating Margin
17.1%
Net Margin
10.7%
ROE
27.1%
ROA
5.9%
FCF Margin
11.2%
WM Balance Sheet & Liquidity
Current Ratio
0.89x
Quick Ratio
0.89x
Debt/Equity
2.22x
Debt/Assets
78.2%
Interest Coverage
8.62x
Long-term Debt
$22.2B
Disclaimer: This analysis is generated by Claude AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research and consult with a qualified financial advisor before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: Mar 18, 2026 |
Data as of: 2025-12-31 |
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