WM (formerly Waste Management) reported Q3 2025 adjusted diluted EPS of $1.98, missing analyst estimates, and lowered its full-year 2025 revenue guidance to the low end of its prior range, primarily due to underperformance in its healthcare solutions and recycling segments, which saw a significant 35% drop in single-stream commodity prices. Despite these near-term headwinds, the company's core collection and disposal business performed strongly, and WM projects robust free cash flow of $2.8-$2.9 billion for 2025 and $3.8 billion for 2026, comfortably covering its dividend, which it has consistently raised for 22 consecutive years. This financial resilience, coupled with its essential services and a more reasonable valuation, positions WM as an attractive option for risk-averse institutional investors seeking stable income and capital preservation.
WM reported Q3 2025 adjusted diluted EPS of $1.98, missing analyst consensus of $2.01, and subsequently lowered its 2025 revenue guidance to the low end of its prior range. This underperformance was primarily driven by its healthcare solutions segment, which deferred price increases, and the recycling processing and sales segment, which saw a significant 35% year-over-year drop in blended average single-stream commodity prices to $68 per ton. Despite these headwinds, WM's core collection and disposal business delivered record results. The company projects robust free cash flow (FCF) of $2.8-$2.9 billion for 2025 and $3.8 billion for 2026, significantly exceeding its dividend payouts of just over $1 billion in the nine months ended September 30. This strong FCF generation underpins WM's ability to sustain its dividend, which has been raised for 22 consecutive years, including a 10% increase last December. The projected 2026 FCF translates to a 4.5% FCF yield, indicating substantial capacity for future capital returns and strategic investments. WM's business model, providing essential services, offers defensive characteristics and performs well across economic cycles, making it attractive for risk-averse investors. The stock's valuation at 27.4 times 2025 projected earnings is now more reasonable compared to its 10-year median price-to-earnings ratio of 29.4, suggesting a potentially attractive entry point. The company's strategic investments in recycling, renewables, and healthcare, supported by its FCF, position it for long-term growth despite current segment challenges.
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Overall Sentiment
moderately positive
Sentiment Score
0.50
Ticker Sentiment
