WM

WM is exactly the kind of business you want to own forever: irreplaceable landfill assets, local pricing power, and a fortress cash engine. FY2025 operating cash flow rose 12.1% to $6.04B against $3.23B of capex, leaving roughly $2.8B of free cash that funds a growing dividend ($1.33B, +10.2%). Returns on capital are excellent at 27.1% ROE, and the franchise threw off 17.1% operating margins. The MD&A's emphasis on recovering inflation 'through our overall pricing efforts' is the whole bull case in one line — this is a price-taker's dream where the company is the price-setter.

The catch is that the headline 14.2% revenue jump to $25.2B is not organic strength — it is bought growth. Depreciation & amortization surged 26.3% in a single year, the kind of step-change that only comes from a large acquisition being consolidated, and the result is telling: revenue grew double-digits yet net income FELL 1.4% to $2.71B and diluted EPS slipped to $6.70. So the acquisition has, for now, diluted earnings while loading the balance sheet — liabilities sit at 3.59x equity, long-term debt is $22.9B, and cash is a thin $201M (down 51.4%). The filing flags $2.9B of debt repricing within 12 months and ~$35M of added interest expense per 100bp move; manageable, but it caps the margin for error. The 10-K also confirms a real 2025 headwind: single-stream recycled commodity prices fell ~20%, cutting recycling yield revenue by $166M — a swing factor that works both ways.