Stock Analysis & Valuation Waste Management, Inc. (0LTG.L)

• Previous Close: £220.04
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	112.60	-49
Intrinsic value (DCF)	149.93	-32
Graham-Dodd Method		n/a
Graham Formula	82.20	-63

Strategic Investment Analysis

Company Overview

Waste Management, Inc. (WM) is a leading provider of comprehensive waste management and environmental services across North America. Headquartered in Houston, Texas, the company serves residential, commercial, industrial, and municipal customers with a broad range of solutions, including waste collection, recycling, landfill operations, and renewable energy generation. WM operates an extensive network of 255 solid waste landfills, 96 material recovery facilities (MRFs), and 340 transfer stations, positioning it as a dominant player in the waste management industry. The company also specializes in hazardous waste disposal, construction remediation, and recycling brokerage services. With a strong focus on sustainability, WM leverages landfill gas-to-energy projects to convert waste into renewable power. As part of the Industrials sector, WM plays a critical role in environmental stewardship while delivering consistent financial performance. Its vertically integrated model ensures efficiency and resilience in a highly regulated industry.

Investment Summary

Waste Management, Inc. presents a compelling investment case due to its market leadership, stable cash flows, and strong operational efficiency in the essential waste management sector. The company benefits from recurring revenue streams tied to long-term contracts and regulatory barriers that limit competition. With a market cap of ~$94.4B and a beta of 0.68, WM offers defensive characteristics suitable for risk-averse investors. Its robust operating cash flow ($5.39B) supports consistent dividends ($3.075/share) and strategic capital expenditures ($3.23B in FY 2024). However, high total debt ($24.94B) and exposure to environmental regulations pose risks. The company’s focus on sustainability and landfill gas-to-energy projects aligns with growing ESG investment trends, enhancing long-term growth prospects.

Competitive Analysis

Waste Management, Inc. holds a dominant position in the North American waste management industry, supported by its extensive infrastructure, economies of scale, and vertically integrated operations. Its competitive advantage stems from ownership of critical landfill assets, which are difficult to replicate due to stringent permitting processes. WM’s recycling and renewable energy initiatives further differentiate it from peers, aligning with regulatory and consumer demand for sustainable waste solutions. The company’s large-scale operations enable cost efficiencies in collection and transportation, while its long-standing customer relationships provide revenue stability. However, competition remains intense, particularly from regional players and vertically integrated rivals like Republic Services. WM’s focus on technology adoption (e.g., route optimization, automation) enhances productivity, but rising labor and compliance costs could pressure margins. The company’s ability to pass on cost increases through pricing power mitigates some risks, but competitive pressures in recycling commoditization remain a challenge.

Major Competitors

• Republic Services, Inc. (RSG): Republic Services is WM’s closest competitor, with a strong presence in solid waste collection and recycling. It operates ~340 collection operations and 198 landfills, offering similar scale but with a slightly smaller footprint. Republic has been aggressive in sustainability initiatives, including renewable natural gas projects, but lacks WM’s landfill gas-to-energy dominance. Its pricing discipline and acquisition strategy bolster growth, though it trails WM in free cash flow generation.
• Waste Management, Inc. (WM): Note: This is the same company as the subject (0LTG.L is a secondary listing of WM on the LSE).
• GFL Environmental Inc. (GFL): GFL is a fast-growing Canadian waste management firm expanding aggressively in the U.S. through acquisitions. It lacks WM’s scale but offers diversification in solid waste, liquid waste, and infrastructure services. GFL’s high leverage and integration risks from acquisitions are weaknesses, but its lower-cost operations in secondary markets provide competitive pricing flexibility.
• Casella Waste Systems, Inc. (CWST): Casella is a regional player focused on the Northeastern U.S., specializing in resource recovery and recycling. It has a smaller landfill network but excels in niche markets like organics recycling. Its regional concentration limits scale advantages compared to WM, though it benefits from less exposure to commoditized recycling markets.
• Clean Harbors, Inc. (CLH): Clean Harbors competes in hazardous waste disposal and environmental services, areas where WM has a smaller presence. Its expertise in industrial waste treatment and regulatory compliance provides differentiation, but it lacks WM’s breadth in municipal solid waste collection and landfill operations.