Is Waste Management Still a Buy After Its Strong Share Price Run? Balancing Growth, Valuation, and Long-Term Defensiveness in a Mature Utility-Style Play

Waste Management (NYSE: WM) has long been a staple in the portfolios of investors seeking defensive, utility-style plays. With a 10.6% compounded annual revenue growth rate over the past five years and a forward P/E ratio of 27.1x-considered compelling in the industrials sector-the stock has attracted attention even after its recent gains. But as the company's shares trade at a premium, the question remains: Is Waste Management still a buy? To answer this, we must dissect its valuation, growth trajectory, and long-term defensiveness through the lens of its financials, competitive advantages, and strategic initiatives.

Valuation: A Premium Justified by Cash Flow and Moat?

Waste Management's forward P/E of 27.1x appears elevated compared to the broader market, but it reflects the company's robust free cash flow generation and durable competitive advantages. In Q3 2025, free cash flow margins surged to 45% from 10.3% year-over-year, a testament to its operational efficiency. This improvement, coupled with a strong balance sheet-despite a debt-to-equity ratio of 2.45-suggests the company can sustain its dividend growth (7.2% CAGR since 2004) and fund strategic investments.

However, the valuation isn't without risks. While the stock's utility-like characteristics typically command higher multiples, its 6.8% projected growth rate for the next 12 months lags behind its historical performance. Investors must weigh whether the current multiple adequately compensates for slower growth or if the company's moat-rooted in its landfill network and regulatory barriers to entry-justifies the premium.

Growth: Navigating Near-Term Challenges, Eyeing Long-Term Tailwinds

Waste Management's growth story is a mixed bag. The Stericycle acquisition, while strategic for expanding into medical waste, has introduced near-term headwinds. However, the company has outlined $300 million in synergies by 2027, and its renewable energy projects are gaining traction. In Q3 2025, 10 of 20 planned RNG facilities were completed, with combined EBITDA from recycling and renewables growing over 20% year-over-year. These initiatives align with broader trends in sustainability, positioning Waste Management to benefit from long-term demand for waste-to-energy solutions.

That said, the industrial sector's growth outlook is tempered by macroeconomic risks. Analysts project Waste Management's revenue growth to decelerate to 6.8% in the near term, a pace that may test the stock's ability to justify its valuation. The company's leverage ratio of 3.3x also highlights the need for disciplined debt management as it targets a 2.5–3.0x range by mid-2026.

Defensiveness: A Wide Moat in a Cyclical Sector

Waste Management's utility-style defensiveness stems from its "essential" service model. Landfill ownership, a core asset, is nearly impossible to replicate due to regulatory and logistical hurdles. This creates a wide moat that insulates the company from cyclical downturns. Additionally, its pricing discipline and cost controls-evidenced by a 45% free cash flow margin-further reinforce its stability.

The dividend's 7.2% CAGR since 2004 underscores its appeal to income-focused investors. Even as the company invests in high-margin projects like RNG and recycling automation which are gaining traction, its ability to maintain dividend growth without overleveraging remains a key strength. Analysts project shares could double by 2030, a forecast that hinges on the successful execution of these initiatives.

The Verdict: A Buy, But With Caution

Waste Management's combination of a durable moat, improving cash flow margins, and strategic investments in renewables makes it a compelling long-term holding. However, its current valuation demands careful scrutiny. The forward P/E of 27.1x is reasonable for a defensive stock with a 45% free cash flow margin, but it may appear stretched if growth fails to meet expectations.

For investors with a multi-year horizon, the stock's utility-like characteristics and exposure to secular trends in sustainability justify a "buy" rating. Yet, those seeking near-term outperformance may want to wait for a pullback or clearer signs that Stericycle integration and RNG projects deliver promised synergies. In the end, Waste Management remains a high-moat, low-volatility play-ideal for portfolios seeking stability but not a get-rich-quick bet.