Company Reports

According to a May 16 Reuters report, wide-moat Waste Management is considering selling its renewable natural gas business. It could fetch a $3 billion valuation using the 2023 Enbridge acquisition of Morrow Renewables’ RNG operations as a comparable transaction. We presume the report references the firm's renewable energy segment, which, in fiscal 2023, delivered $112 million of EBITDA on $273 million of net sales, or a 41% EBITDA margin. At the end of 2023, the segment had 92 landfill gas projects on owned and operated landfills. Sixty-six projects provide gas to electricity generators, 20 projects generate gas used at the landfill or piped to industrial customers, and six projects process pipeline-quality renewable natural gas sold to natural gas suppliers. In 2023, management announced an ambitious RNG investment plan, which targeted 20 new RNG projects generating $500 million in incremental EBITDA by 2026. That EBITDA target was later increased to $510 million. In 2022-23, Waste Management spent over $700 million on renewable energy capital expenditures, and management had earmarked an additional $450 million for 2024-25. In our view, these investments would further monetize the firm’s valuable landfill footprint while bolstering its environmental, social, and governance standing. However, we caution that management’s financial projections depend on prices of natural gas and renewable identification numbers, which can be volatile.

Waste collection and disposal industry leader WM enjoys leading market share and unmatched dominance in landfill ownership, which is nearly impossible to replicate given immense regulatory hurdles. This leadership position expanded after the firm's October 2020 acquisition of Advanced Disposal, which had been the fourth-largest publicly traded waste collection and disposal company in the United States.

Wide-moat-rated Waste Management reported mixed first-quarter results, as reported revenue growth came in slightly below the FactSet consensus estimate, but adjusted EPS handily exceeded the consensus estimate. Additionally, management slightly reduced sales guidance for fiscal 2024 because of certain headwinds unrelated to the core business and increased full-year guidance with respect to profitability. As a result, we expect to modestly increase our fair value estimate, as we believe improved profitability offsets slower near-term sales growth.

Wide-moat Waste Management reported robust fourth-quarter earnings as year-over-year revenue growth accelerated on a sequential basis from 2.4% to 5.7%. Additionally, continued rationalization of operating expenses drove record adjusted EBITDA margin of 29.9%. We expect WM's momentum to carry into 2024, resulting in sales and adjusted EBITDA above our prior expectations. As such, we increased our fair value estimate 5% to $159 per share due to our more optimistic near-term growth and profit margin assumptions.

Waste collection and disposal industry leader WM enjoys leading market share and unmatched dominance in landfill ownership, which is nearly impossible to replicate given immense regulatory hurdles. This leadership position expanded after the firm's October 2020 acquisition of Advanced Disposal, which had been the fourth-largest publicly traded waste collection and disposal company in the United States.

Waste collection and disposal industry leader WM enjoys leading market share and unmatched dominance in landfill ownership, which is nearly impossible to replicate given immense regulatory hurdles. This leadership position expanded after the firm's October 2020 acquisition of Advanced Disposal, which had been the fourth-largest publicly traded waste collection and disposal company in the United States.

Waste Management, the wide-moat leader in U.S. solid waste collection and disposal, reported good third-quarter financial results. Total revenue increased 2.4% year over year to $5.2 billion, which was modestly below our estimate due to easing core price growth (6.6% this quarter versus 8.2% during the year-ago quarter). Nevertheless, price increases outpaced cost inflation, and WM’s adjusted EBITDA margin expanded 100 basis points to 29.6%, 60 basis points above our estimate. Adjusted EPS of $1.63 increased 4.5% year over year.

Waste collection and disposal industry leader WM enjoys leading market share and unmatched dominance in landfill ownership, which is nearly impossible to replicate given immense regulatory hurdles. This leadership position expanded after the firm's October 2020 acquisition of Advanced Disposal, which had been the fourth-largest publicly traded waste collection and disposal company in the United States.

Wide-moat Waste Management delivered second-quarter results slightly below our expectations as commodity pricing within the renewables business was worse than anticipated. Nevertheless, we raised our fair value estimate about 3% to $149 per share due to our revised expectations for lower future selling, general, and administrative spending, as well as the time value of money.

Waste collection and disposal industry leader WM enjoys leading market share and unmatched dominance in landfill ownership, which is nearly impossible to replicate given immense regulatory hurdles. This leadership position expanded after the firm's October 2020 acquisition of Advanced Disposal, which had been the fourth-largest publicly traded waste collection and disposal company in the United States.

Wide-moat-rated Waste Management posted first-quarter results in line with our expectations as the company maintained strong price discipline, made progress on cost structure optimization efforts, and continued to invest in long-term sustainability objectives. Additionally, management expects to achieve full-year 2023 guidance provided during the company's fourth-quarter 2022 earnings call. To reiterate, management expects top-line growth of 4%-5.5% and adjusted EBITDA margin expansion of 60 basis points at the midpoint of guidance. We maintain our $145 per share fair value estimate as our outlook is unchanged. We remain encouraged by the firm’s pricing power, development of sustainability projects, and its initiatives to drive operational efficiencies.

Waste Management held a sustainability investor day on April 5 where the wide-moat-rated solid waste collection and disposal leader provided more details behind its renewable energy and recycling investments, which are expected to total a cumulative $2.2 billion in capital expenditures between 2022 and 2025. By 2026, management continues to expect its landfill gas-to-renewable natural gas and recycling projects to deliver EBITDA of $500 million and $240 million, respectively. Management now also sees an additional $100 million EBITDA opportunity from e-renewable identification numbers, or e-RINs, and royalties from partnering with third-party RNG developers. The former opportunity would stem from electricity generated from WM’s landfill gas-to-electricity assets that is used to power electric vehicles.

Waste industry leader WM enjoys leading market share and unmatched dominance in landfill ownership, which is nearly impossible to replicate given immense regulatory hurdles. This leadership position expanded after the firm's October 2020 acquisition of Advanced Disposal, which had been the fourth-largest publicly traded waste collection and disposal company in the United States.

Wide-moat Waste Management posted fourth-quarter results that were slightly below our expectations due to lower recycled commodity prices. Nonetheless, the company benefited from continued strength in its core collection and disposal business, capping off full-year 2022 that featured nearly 10% top-line growth, an adjusted EBITDA margin of 28%, and adjusted EPS of $5.59. Management also issued an optimistic outlook for 2023, guiding top-line growth in the 4.0%-5.5% range and modest EBITDA margin expansion due to pricing tailwinds. We raised our fair value estimate by 7% to $138 per share. We remain encouraged by WM’s pricing power, development of sustainability projects, and its initiatives to drive operational efficiencies.

Waste industry leader WM enjoys leading market share and unmatched dominance in landfill ownership, which is nearly impossible to replicate given immense regulatory hurdles. This leadership position expanded after the firm's October 2020 acquisition of Advanced Disposal, which had been the fourth-largest publicly traded waste collection and disposal company in the United States.

Wide-moat WM reported third-quarter results that were mostly in line with our expectations. Overall, the company delivered strong results, which featured 9% year-over-year revenue growth, 50 basis points of adjusted EBITDA margin expansion to 28.6%, and 24% adjusted EPS growth to $1.56. Management maintained its full-year guidance for about 10% revenue growth and a 28.1% adjusted EBITDA margin (at the midpoint of guidance). We project that WM will modestly exceed these targets. We’ve increased our fair value estimate by about 1% to $129 per share primarily due to the time value of money since our last update.

Waste industry leader WM enjoys leading market share and unmatched dominance in landfill ownership, which is nearly impossible to replicate given immense regulatory hurdles. This leadership position expanded after the firm's October 2020 acquisition of Advanced Disposal, which had been the fourth-largest publicly traded waste collection and disposal company in the United States.

Waste industry leader Waste Management enjoys leading market share and unmatched dominance in landfill ownership, which is nearly impossible to replicate given immense regulatory hurdles. This leadership position expanded after the firm's October 2020 acquisition of Advanced Disposal, which had been the fourth-largest publicly traded waste collection and disposal company in the United States.

Wide-moat-rated Waste Management delivered strong second-quarter results that exceeded our expectations due to better-than-anticipated pricing and cost containment. Our more optimistic near-term revenue growth outlook and the time value of money caused us to increase our fair value estimate 3% to $128 per share.

Waste industry leader Waste Management enjoys leading market share and unmatched dominance in landfill ownership, which is nearly impossible to replicate given immense regulatory hurdles. This leadership position expanded after the firm's October 2020 acquisition of Advanced Disposal, which had been the fourth-largest publicly traded waste collection and disposal company in the United States.