Waste management services provider Waste Management (NYSE: WM) reported Q3 2026 results beating Wall Street’s revenue expectations, with sales up 6.3% year on year to $6.85 billion. The company expects the full year’s revenue to be around $26.38 billion, close to analysts’ estimates. Its non-GAAP profit of $2.15 per share was 1.4% below analysts’ consensus estimates.

Is now the time to buy WM? Find out in our full research report (it’s free for active Edge members).

StockStory’s take

Waste Management’s Q3 results were met with a negative market reaction despite revenue coming in above Wall Street expectations. Management attributed the quarter’s resilience to disciplined pricing in its core collection and disposal business, as well as cost reductions supported by technology and process improvements. The company saw meaningful growth from its healthcare and sustainability segments, with CEO James Fish Jr. highlighting that healthcare operating EBITDA rose 33%. However, higher risk management costs and persistent volume softness in certain segments, particularly residential and commercial, weighed on overall profitability.

Looking ahead, Waste Management’s outlook is built on continued pricing discipline, strategic use of technology, and ongoing integration of its healthcare and sustainability businesses. New CEO John Morris emphasized that investments in automation and process efficiency are expected to support operating margin expansion, even as fuel costs and regulatory pressures remain headwinds. The company’s leadership remains focused on capturing further synergies from the healthcare segment, expanding renewable energy initiatives, and maintaining a robust pipeline of tuck-in acquisitions. Morris stated, “Our priorities remain clear: maintain a disciplined price-to-cost spread, embed technology across operations, and execute on strategic investments.”

Key insights from management’s remarks

Management pointed to strong price-to-cost spread, technology-driven cost optimization, and healthcare integration as the main drivers of Q3 performance, while acknowledging rising fuel and risk costs as notable headwinds.

• Healthcare segment acceleration: The healthcare solutions business delivered 33% operating EBITDA growth, driven by improved pricing and significant reductions in SG&A (selling, general, and administrative expenses). Management credited ongoing integration efforts and automation as key factors behind these gains, with SG&A in the segment dropping to 15.2% of revenue.
• Technology and automation impact: Investments in smart truck technologies, routing algorithms, and AI-powered dispatch tools helped lower core operating expenses. Management emphasized that these digital initiatives are enabling sustainable cost reductions and margin expansion across collection, disposal, and healthcare segments.
• Residential and commercial volume declines: Intentional volume reductions in residential waste and softness in commercial activity continued, offset by stronger pricing. Management described these as part of a longer-term strategy to focus on higher-margin business, with residential volumes improving sequentially but still negative for the year.
• Sustainability business momentum: The company expanded its renewable natural gas (RNG) network, bringing its 18th facility online and increasing contracted production for 2026 and 2027. Recycling operating EBITDA grew 40%, supported by automation and higher commodity prices. These segments are expected to contribute increasing earnings visibility.
• Elevated risk and fuel costs: Higher fuel prices and a $63 million increase in risk management costs, including actuarial adjustments and large loss claims, pressured margins. Management does not view these as structural issues, but noted they contributed to the quarter’s margin headwinds.

Drivers of future performance

Management’s outlook for the next year centers on disciplined pricing, further healthcare integration, and margin expansion through technology, with volume recovery remaining uncertain.

• Sustained pricing discipline: Leadership expects to maintain strong price-to-cost spreads, particularly in landfill and transportation, as new regulatory costs arise. The ability to pass through inflation and fuel-related expenses is seen as essential for protecting profitability in a muted volume environment.
• Healthcare synergy realization: The team aims to achieve targeted cost synergies in healthcare by mid-2027, with further reductions in SG&A and incremental cross-selling. Management believes that additional automation and integration can drive margins closer to the core business’s levels.
• Sustainability and RNG growth: New and existing renewable energy projects are expected to deliver incremental EBITDA, with over 40% of 2027 RNG production already contracted. Management highlighted that these investments should diversify earnings and reduce exposure to commodity price volatility.

Catalysts in upcoming quarters

As we look to the next few quarters, our analyst team will be watching (1) the pace of margin expansion driven by technology and healthcare integration, (2) progress on renewable energy and recycling projects as they contribute to earnings diversity, and (3) signs of stabilization or recovery in residential and commercial volumes. Execution on M&A and the company’s ability to pass through regulatory and fuel cost pressures will also be key indicators of management’s effectiveness.

Waste Management currently trades at $227.39, down from $236.60 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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