Investors got a split decision when Waste Management Inc. (NYSE: WM) reported earnings after the market closed on April 28. Earnings per share (EPS) of $1.67 beat analysts’ forecasts by eight cents. However, revenue came in at $6.02 billion, which was 1.4% lower than the $6.14 billion that was expected. To add more context, even with the miss, the company’s revenue still came in 16.7% higher on a year-over-year (YOY) basis.
WM stock dipped about 1% after the report, but quickly made up that gain and more. That puts the stock within striking distance of its all-time high, which was set at the beginning of April.
Investors in companies like Waste Management and its leading competitor, Republic Services Inc. (NYSE: RSG), frequently remark that "trash is cash." But WM's stock performance in 2025 raises the question of whether the stock is overbought at its current price.
A Stock Free of Tariff Trouble and With Solid Growth Drivers
When investors are looking for stocks that aren’t subject to tariffs, a company that collects trash and recyclables doesn’t get much more tariff-proof than a company that collects trash and recyclables. It’s an evergreen company among business services stocks and is the leading provider of comprehensive waste management environmental services.
In its earnings report, Waste Management highlighted a key sector of growth, WM Healthcare Solutions. This is the company’s medical waste and secure information destruction businesses. The company reported “significant progress” in integrating this unit into the business. WM Healthcare Solutions accounted for about 10% of the company’s revenue in the first quarter. The company also said it expanded this unit’s margin by about 20% in the quarter.
Waste Management also highlighted two new automated recycling projects (what they refer to as next-generation recycling plants) that launched in key markets in the first quarter. The company plans to open seven more next-generation recycling plants in 2025, in addition to eight new renewable natural gas facilities, which it plans to open this year.
These are part of the company’s commitment to sustainability, which it displays in solutions that enhance the circular economy in the companies in which it does business.
Overvalued Is in the Eye of the Beholder
When you add in Waste Management’s dividend, which increased for the 22nd consecutive year earlier this year, you can see why it’s a solid buy-and-hold investment. But is it a stock that should be attracting new capital at this time?
[content-module:Forecast|NYSE:WM]Some investors may view Waste Management’s 33.7x price-to-earnings (P/E) ratio with caution, but it aligns closely with the company’s three- and five-year historical averages. While this doesn’t suggest the stock is undervalued, it does indicate the valuation is consistent with its own performance trends.
The company’s P/E ratio becomes less important when you look at its free cash flow (FCF), which is also trending above its recent yearly averages. Waste Management generated $475 million in FCF in the quarter but reiterated its prior outlook for approximately $2.68 billion to $2.78 billion in free cash flow for the full year.
That said, even if the company comes in at the low end of its full-year revenue guidance, it would be a 15% YOY increase. However, WM stock is up about 13% year-to-date, which suggests that much of that growth may already be priced into the stock.
The Waste Management analyst forecasts on MarketBeat give the stock a Moderate Buy rating. However, the consensus price target of $239.83 is within 5% of the stock’s closing price on April 29. And while WM stock is within the Neutral range on the Relative Strength Index, it hit overbought levels when it hit its all-time high in April.
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