Waste Management, Inc. (WM): A Bull Case Theory

We came crossed a bullish thesis on Waste Management, Inc. connected Rigatoni Capital’s Substack. In this article, we volition summarize the bulls’ thesis connected WM. Waste Management, Inc.'s stock was trading astatine $216.18 arsenic of January 13th. WM’s trailing and guardant P/E were 34.04 and 25.71 respectively according to Yahoo Finance.

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Waste Management is the largest integrated discarded services supplier successful North America, operating a vertically integrated web of postulation routes, transportation stations, recycling facilities, and landfills that creates a important competitory moat. Waste Management represents a classical antiaircraft concern with a durable moat built connected recurring revenue, beardown pricing power, and dependable borderline expansion, adjacent though its halfway trash removal operations connection constricted measurement driven growth.

Despite this maturity, the institution delivered astir 16% twelvemonth implicit twelvemonth gross growth, mostly driven by terms increases and incremental measurement gains, highlighting the resilience of its model. More importantly, the marketplace appears to beryllium underappreciating WM’s emerging maturation vectors, peculiarly its renewable vigor initiatives. Investments successful landfill state to vigor projects and recycling automation are expected to meaningfully grow escaped currency flow, with Bernstein forecasting a astir 20% escaped currency travel CAGR implicit the adjacent 3 years, good up of peers similar Waste Connections and Republic Services. WM generated astir $2.4 cardinal successful escaped currency travel implicit the past year, with absorption projecting this fig to ascent to astir $3.8 cardinal by 2026, supported by declining dense capex requirements.

The renewable vigor conception could go a worldly net contributor arsenic WM captures methane from landfills and converts it into earthy state and electricity, a assets that whitethorn go progressively invaluable arsenic vigor request from AI driven information halfway infrastructure grows.

Bernstein estimates this conception could make $760 to $800 cardinal successful EBITDA by 2027, providing incremental upside that is not afloat reflected successful existent valuations. While concerns astir the $7.2 cardinal Stericycle acquisition apt weighed connected sentiment owed to integration and recycling commodity risks, shareholder returns stay robust, with a 14.5% dividend summation planned for 2026 and a caller $3 cardinal buyback authorization.

Although the banal trades astatine a premium multiple, its inferior similar characteristics, predictable currency flows, and past of extended consolidations followed by crisp reratings suggest charismatic semipermanent risk-reward.