Investment Thesis
Waste Management demonstrates strong revenue growth of 14.2% YoY and healthy free cash flow generation of $851M, but concerning margin compression where net income remains flat despite significant revenue expansion signals operational deterioration. High leverage (2.22x Debt/Equity) combined with weak liquidity (0.93x current ratio) and low returns on capital (ROE 7.2%, ROA 1.6%) create financial risks that offset growth momentum.
Strengths
- Strong revenue growth of 14.2% YoY indicates market momentum and pricing power in core waste management business
- Robust free cash flow generation of $851M with 13.7% FCF margin provides reliable cash for debt service and capital investment
- Solid operating margin of 17.9% demonstrates operational efficiency despite challenges in net margin conversion
Risks
- Net income flat despite 14.2% revenue growth signals concerning margin compression and deteriorating operational or cost efficiency
- High financial leverage with Debt/Equity of 2.22x and $22.2B long-term debt limits financial flexibility and refinancing options
- Weak liquidity position with current ratio of 0.93x and low cash reserves of $158M relative to substantial debt obligations and company scale
Key Metrics to Watch
- Net profit margin trend and operating expense ratio - indicating whether margin compression can be arrested
- Debt reduction trajectory and interest coverage ratio - assessing deleveraging progress and debt serviceability
- Free cash flow sustainability - ensuring cash generation supports debt obligations amid operational challenges
Financial Metrics
Revenue
6.2B
Net Income
723.0M
EPS (Diluted)
$1.79
Free Cash Flow
851.0M
Total Assets
45.7B
Cash
158.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
17.9%
Net Margin
11.6%
ROE
7.2%
ROA
1.6%
FCF Margin
13.7%
Balance Sheet & Liquidity
Current Ratio
0.93x
Quick Ratio
0.93x
Debt/Equity
2.22x
Debt/Assets
78.1%
Interest Coverage
2.23x
Long-term Debt
22.3B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T14:08:48.443645 |
Data as of: 2026-03-31 |
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