Waste management services provider Waste Management (NYSE: WM) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 14.9% year on year to $6.44 billion. Its non-GAAP profit of $1.98 per share was 1.6% below analysts’ consensus estimates.
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Waste Management (WM) Q3 CY2025 Highlights:
- Revenue: $6.44 billion vs analyst estimates of $6.51 billion (14.9% year-on-year growth, 1% miss)
- Adjusted EPS: $1.98 vs analyst expectations of $2.01 (1.6% miss)
- Adjusted EBITDA: $1.97 billion vs analyst estimates of $1.96 billion (30.6% margin, in line)
- EBITDA guidance for the full year is $7.55 billion at the midpoint, in line with analyst expectations
- Operating Margin: 15.3%, down from 20% in the same quarter last year
- Free Cash Flow Margin: 45%, up from 10.3% in the same quarter last year
- Market Capitalization: $86.47 billion
“Our 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,” said Jim Fish, WM’s CEO.
Company Overview
Headquartered in Houston, Waste Management (NYSE: WM) is a provider of comprehensive waste management services in North America.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Waste Management grew its sales at an impressive 10.6% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Waste Management’s annualized revenue growth of 10.9% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong. 
This quarter, Waste Management’s revenue grew by 14.9% year on year to $6.44 billion but fell short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Waste Management’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 17.2% over the last five years. This profitability was elite for an industrials business thanks to its efficient cost structure and economies of scale. This is seen in its fast historical revenue growth and healthy gross margin, which is why we look at all three data points together.
Looking at the trend in its profitability, Waste Management’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. We like to see margin expansion, but Waste Management’s performance still shows it’s one of the better Waste Management companies as most peers saw their margins plummet.
This quarter, Waste Management generated an operating margin profit margin of 15.3%, down 4.6 percentage points year on year. Conversely, its revenue and gross margin actually rose, so we can assume it was less efficient because its operating expenses like marketing, R&D, and administrative overhead grew faster than its revenue.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Waste Management’s remarkable 12.2% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.
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 Waste Management, its two-year annual EPS growth of 12.4% is similar to its five-year trend, implying strong and stable earnings power.
In Q3, Waste Management reported adjusted EPS of $1.98, up from $1.96 in the same quarter last year. Despite growing year on year, this print slightly missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Waste Management’s full-year EPS of $7.27 to grow 12%.
Key Takeaways from Waste Management’s Q3 Results
We struggled to find many positives in these results. Its revenue slightly missed and its EPS fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 2.5% to $208.27 immediately after reporting.
Waste Management’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
