Waste Management (WM) Stock Drops After Earnings

By Joel South Published Oct 27, 5:52PM EDT

Key Points

Waste Management missed on both EPS and revenue, cutting full-year guidance to the low end amid recycling weakness.
Core Collection and Disposal margins hit records, offsetting recycling declines as free cash flow rose 13.5% year over year.
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Waste Management (WM) Stock Drops After Earnings — © kozmoat98 / Getty Images

Waste Management (NYSE: WM | WM Price Prediction) missed on both earnings and revenue in Q3, posting adjusted EPS of $1.49 against expectations of $2.08 and revenue of $6.44B versus $6.70B estimated. The stock fell 2.35% in after-hours trading, though the decline was modest given the magnitude of the misses. The real pressure comes from guidance. Management now expects full-year revenue at the low end of its prior range, citing declining recycled commodity prices and softer healthcare solutions revenue.

Collection and Disposal Delivers, But Recycling Stumbles

The company’s core Collection and Disposal business posted record-setting margins, a genuine bright spot in an otherwise uneven quarter. That strength underscores the resilience of WM’s primary revenue engine. Free cash flow grew 13.5% year over year in the first nine months, reaching $821M in Q3 alone, which signals solid operational execution despite headline disappointment. Management also completed two new renewable natural gas facilities and two recycling projects, advancing its sustainability strategy.

Recycling, however, dragged results lower. The segment faced a $60M revenue decline tied directly to lower commodity prices. That’s a headwind the company can’t control in the near term, and it’s material enough to shift full-year expectations.

Revenue Miss Signals Commodity Headwinds Ahead

The $260M revenue miss reflects two specific pressures: recycled commodity prices have declined more sharply than anticipated, and WM Healthcare Solutions revenue came in softer than expected. Neither is a sign of operational failure, but both signal that near-term visibility is limited. Management reaffirmed adjusted operating EBITDA and free cash flow guidance, which suggests confidence in core cash generation. That’s reassuring, but it doesn’t offset the fact that revenue expectations are now anchored to the low end of guidance.

Key Figures

Adjusted EPS: $1.49 (vs. $2.08 expected); miss of $0.59
Revenue: $6.44B (vs. $6.70B expected); miss of $260M
Revenue Growth: 14.9% year over year
Operating Income: $989M
Net Income: $603M
Free Cash Flow: $821M; up 13.5% YoY (nine-month basis)
Operating Cash Flow: $1.592B
Full-Year Revenue Guidance: ~$25.275B (low end of prior range)

I’d watch free cash flow closely. It’s the metric management is most confident about, and it’s the one that matters most for dividend sustainability and capital allocation.

Management Strikes a Measured Tone

CEO Jim Fish emphasized that “third quarter results highlight momentum in WM’s earnings growth and free cash flow conversion, which is driven by our strong operating platform, diverse and growing customer base, and expanding sustainability businesses.” The language is upbeat on execution but notably silent on near-term demand trends. He added that “strong results across all aspects of our business reinforce our confidence in achieving our full-year earnings and free cash flow guidance, as well as our long-term financial objectives and strategic priorities.”

That confidence is real, but it’s anchored to guidance management has already walked to the low end. Leadership isn’t signaling weakness, but they’re not signaling strength either.

What to Watch Next

Listen for specifics on commodity price trends and timing. Management guided to the low end of revenue range, but the question is whether that’s the floor or whether further pressure is possible. You’ll also want to hear how they’re thinking about pricing power in Collection and Disposal, which remains the earnings engine. That segment’s margin strength suggests pricing is holding, but confirmation matters.

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About the Author Joel South →

Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.

He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.