Waste management company Casella (NASDAQ: CWST) announced better-than-expected revenue in Q3 CY2025, with sales up 17.9% year on year to $485.4 million. On the other hand, the company’s full-year revenue guidance of $1.83 billion at the midpoint came in 0.5% below analysts’ estimates. Its non-GAAP profit of $0.42 per share was 29.5% above analysts’ consensus estimates.

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“We reported another quarter of record performance across our key financial metrics as we continue to execute on our operating plans and disciplined acquisition strategy,” said John W. Casella, Chairman and CEO of Casella Waste Systems, Inc.

Company Overview

Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ: CWST) offers waste management services for businesses, residents, and the government.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Casella Waste Systems grew its sales at an incredible 18.5% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Casella Waste Systems’s annualized revenue growth of 23.5% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Casella Waste Systems reported year-on-year revenue growth of 17.9%, and its $485.4 million of revenue exceeded Wall Street’s estimates by 1.9%.

Looking ahead, sell-side analysts expect revenue to grow 8% over the next 12 months, a deceleration versus the last two years. Still, this projection is above average for the sector and implies the market sees some success for its newer products and services.

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Operating Margin

Casella Waste Systems was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.2% was weak for an industrials business. This result is surprising given its high gross margin as a starting point.

Looking at the trend in its profitability, Casella Waste Systems’s operating margin decreased by 5 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Casella Waste Systems’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q3, Casella Waste Systems generated an operating margin profit margin of 6.1%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Casella Waste Systems’s EPS grew at a decent 8.9% compounded annual growth rate over the last five years. However, this performance was lower than its 18.5% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into Casella Waste Systems’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Casella Waste Systems’s operating margin was flat this quarter but declined by 5 percentage points over the last five years. Its share count also grew by 30.8%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Casella Waste Systems, its two-year annual EPS growth of 18.1% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q3, Casella Waste Systems reported adjusted EPS of $0.42, up from $0.27 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Casella Waste Systems’s full-year EPS of $1.38 to shrink by 13.1%.

Key Takeaways from Casella Waste Systems’s Q3 Results

It was good to see Casella Waste Systems beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its full-year EBITDA guidance slightly missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock traded up 2.3% to $84.96 immediately after reporting.

Casella Waste Systems may have had a good quarter, but does that mean you should invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.