Waste Management Caps Off Strong 2022 Led by Resilient Pricing

Wide-moat Waste Management posted fourth-quarter results that were slightly below our expectations due to lower recycled commodity prices. Nonetheless, the company benefited from continued strength in its core collection and disposal business, capping off full-year 2022 that featured nearly 10% top-line growth, an adjusted EBITDA margin of 28%, and adjusted EPS of $5.59. Management also issued an optimistic outlook for 2023, guiding top-line growth in the 4.0%-5.5% range and modest EBITDA margin expansion due to pricing tailwinds. We raised our fair value estimate by 7% to $138 per share. We remain encouraged by WM’s pricing power, development of sustainability projects, and its initiatives to drive operational efficiencies.