WM Stock at $211: Price Hikes Are Working, Volumes Are Not
Collection and disposal volume at WM fell 1.8% in the second quarter, and the stock still reports higher profit. That one sentence contains the whole debate about the company. It is also why I am less relaxed about the shares than the old “customers keep paying” story suggests. WM trades around $211.10 as I write this, 14.2% below its 52-week high of $246, at 29.9 times trailing earnings.
Nobody shops around for a trash hauler the way they shop for a phone plan. Routes are local, contracts run for years, and a new landfill is close to impossible to permit. That structure gives WM the ability to raise prices every year and keep almost everyone. My thesis is narrower than the usual “boring compounder” story: the pricing power is real and shows in the margins, but growth from price alone has a ceiling, and at 25.0 times forward earnings the stock already assumes it keeps working. I would call it a good business at a fair price, not a bargain.
What the second quarter actually showed
Revenue rose 4.0% to about $6.7 billion in the June quarter, according to WM’s second-quarter release. Core price, which is the increase WM pushes through on its existing service book, came in at 5.7%. Collection and disposal yield, the version that survives after the mix of customers and volume is netted out, was 3.6%. Volume in that business fell 1.8%, and the company pointed to wildfire cleanup work that inflated the prior-year quarter as a large part of the reason.
Read those four numbers together. A hauler that adds 3.6% in yield and loses 1.8% in volume grows collection and disposal revenue by roughly 1.8% before anything else is counted. The rest of the 4.0% came from recycling, renewable energy and higher energy surcharges, all of which move with commodity and fuel markets. So the part of growth that comes from customers paying more is real, and the part that comes from customers throwing away more is currently negative.
I do not want to overstate the volume problem. A wildfire comparison is a one-off, and a 1.8% dip in a business this size is not a demand collapse. Still, I have watched the same word pair, price and volume, for years in this sector, and the healthy version is price ahead of inflation with flat-to-positive volume. The current version is price carrying volume.
Price hikes show up in margins
Gross margin in the database moved from 39.3% to 40.4% over the latest year, and operating margin sits near 18% on revenue of $25.2 billion for 2025. Net income was $2.7 billion, an 11% net margin. Those are the numbers of a company that keeps a large share of every added dollar, which is the visible fingerprint of pricing power.
Management’s own guidance points the same way. After the second quarter, WM guided 2026 adjusted operating EBITDA margin to between 31.0% and 31.2%, up 20 basis points from the earlier outlook, and adjusted operating EBITDA to $8.15 to $8.25 billion. Revenue guidance went the other direction: $26.275 to $26.475 billion, about 0.6% lower than before, mainly because of weaker volume expectations, partly offset by energy surcharges. Both facts come from the same release.
A company that lowers its revenue outlook and raises its margin outlook in the same breath is telling you what it controls and what it does not. Price and cost it controls. The number of tons arriving at its gates it does not. I take the margin raise seriously, because a hauler does not promise 20 basis points of margin unless internal cost tracking is good. I also read the revenue cut as the more honest half of the message.
Why the growth rate looks strange
Annual revenue went from $19.7 billion in 2022 to $20.4 billion in 2023, $22.1 billion in 2024 and $25.2 billion in 2025. That last step is 14% growth, and it does not describe the organic business. My read is that it reflects the healthcare-waste arm WM acquired, which entered the numbers during that stretch. Growth then dropped back to the mid-single digits, and the quarterly figure of 4% is closer to what the base business does.
The 2026 guidance midpoint of about $26.4 billion against $25.2 billion in 2025 implies roughly 4.7% growth. That is a fine number for a utility-like business. It is not a number that supports a growth multiple, which brings me to the price.
Is 25 times forward earnings fair?
Trailing EPS is $7.07, and the analysts’ forward figure is $8.44. On the trailing number the stock trades at 29.9 times, against a five-year average of 33.1. On the forward number the multiple is 25.0. The gap between those two multiples implies 19% earnings growth, which I treat with suspicion. Part of that is the expected drop-off of one-time costs, and part is optimism about the healthcare business. A hauler growing revenue near 5% and adding a point or so of margin does not produce 19% earnings growth for long.
| Metric | Value | Context |
|---|---|---|
| Price | $211.10 | 52-week range $191 to $246 |
| P/E, trailing | 29.9 | five-year average 33.1 |
| P/E, forward | 25.0 | forward EPS $8.44 |
| Price to sales | 3.3 | five-year average 3.7 |
| Dividend | $3.54 a share | yield 1.68% |
| Analyst target | $262 | range $240 to $277, 17 analysts |
The discount to its own history is real: 29.9 against 33.1, and price to sales of 3.3 against 3.7. But averages from a period of falling interest rates and rapid acquisition growth are a generous yardstick. I would not pay the old average again unless volume turns positive.
Free cash flow makes the same point in another way. The guided range of $3.75 to $3.85 billion is about 4.5% of the $84.4 billion market value. That is a fair yield for a business with a moat, and a thin one for a business whose volume is shrinking.
The dividend and what analysts say
WM paid $3.54 a share over the last twelve months, a 1.68% yield. Against trailing EPS of $7.07 that is a payout ratio of about 50%, and against the forward figure closer to 42%. Neither is stretched. The dividend is safe enough that I would not think about it, and small enough that it will not carry the total return on its own. If you want income, a yield under 2% is not the reason to own this stock.
Of 17 analysts, 65% rate the shares a buy, and the average target of $262 sits 24% above the price. The lowest target, $240, is still 14% above the market, which tells me the range reflects optimism, not disagreement. When even the bear case on the street is above the current price, I trust targets less, not more. Our quantitative grade slipped from B to D over the recent period, a change I would not read as a signal on its own.
Earnings reactions have been small. The stock moved 2.6% on average after reports and -1.2% after the July 28 release. Nothing dramatic, which is what investors are paying for.
Where I could be wrong
Two conditions would change my view. The first is that volume stabilizes. If collection and disposal volume returns to flat or better in the next two quarters while yield stays above 3%, then price hikes stop looking like a substitute for growth, and the stock deserves something closer to its five-year multiple. The second condition works against me: yield slides toward 3% while volume keeps falling, and customers start pushing back through churn or shorter contracts. Then the margin story fades before the multiple does.
There is also a more mundane risk. The healthcare and renewable-gas businesses need capital and management attention, and the returns on those projects will not be visible for several years. A hauler that spends heavily on new plants and integration is a hauler that has less room to raise the buyback, and the share count is one of the quiet drivers of earnings per share.
I am uncertain about how much of the recent margin gain is durable. Energy surcharges and recycled-commodity prices flatter the quarter when they rise and hurt it when they fall, and I cannot separate those effects with the data I have. Someone who has read the segment tables in the 10-Q closely will have a better view.
For context on how I think about paying up for a market-standard franchise, see my note on Thermo Fisher’s premium, where the same question comes up in a different industry. On the defensive-stock comparison, my retail ranking covers what steady compounding costs per dollar of earnings elsewhere.
The number I would wait for
The price path tells its own story. The stock has spent the year between $191 and $246, and it now sits closer to the bottom of that band than the top, only 11% above the low. Buyers have not rushed in after a soft volume print, and I do not blame them.
A holder at $211.10 needs price hikes, margin and buybacks to add up to something near 8% to 10% a year, which is roughly what a 5% revenue base plus margin gains and repurchases can deliver. I would add to a position below about $191, where the multiple would fall under 23 times forward earnings, or if the next report shows volume back at flat. Until one of those happens, I would hold what I own and not chase.
Analysis and opinion only, not investment advice. Figures come from WM’s second-quarter 2026 release, its filings on SEC EDGAR and its investor site; valuation multiples are approximate and were checked on September 22, 2026.