The short version: this is a boring business in the best sense. People don’t stop putting out the trash in a recession, the contracts run for years, and WM can raise prices without losing many customers. At $204 it was trading at its lowest earnings multiple in years. I think it’s undervalued, and I’m buying it.

The scorecard:

• Moat: Wide and stable. Long municipal contracts plus 257 landfills it owns.

• Growth: Average. The industry grows slowly, but Stericycle and renewable gas give it new avenues.

• Management: Good. Strong capital returns, mixed record on beating estimates, and a CEO transition to watch.

• Risk: Very low. No customer is anywhere near 10% of revenue. The real threat is “diversion,” meaning less waste reaching landfills.

• Valuation: Attractive. Around 28.9x earnings and 22.8x free cash flow when we recorded.

We also covered some good questions from chat: how WM’s returns on capital compare with its cost of capital, and why REITs like Realty Income get squeezed when rates rise.

Jump to:

• 0:00 — The question: Is WM a buy at $204?

• 0:19 — What Waste Management actually does

• 3:13 — Financial overview

• 4:19 — Pricing power and recession resistance

• 6:36 — The moat: contracts and landfills

• 7:49 — Growth

• 8:46 — Management

• 9:51 — Risks

• 11:36 — Valuation

• 13:19 — Reverse DCF sanity check

• 15:45 — My verdict

• 16:37 — Q&A: How does WM compare to competitors?

• 18:13 — Q&A: Returns on invested capital vs. cost of capital

• 21:27 — Q&A: Realty Income, Moody’s, and interest rates

I scored WM on every factor using Stock Simplifier. You can run it free on 10,000+ stocks at stocksimplifier.com/dave.

Dividend Live happens every Thursday at 10 am ET right here on Substack. Come hang out and bring your questions.

Disclosure: I own or am buying shares of WM. This is education, not financial advice.