WM Post-Earnings: Pre-Results Hedge Unwinds as Analysts Reassess the Price

Waste Management reported Q3 results on October 27 and the stock's most interesting story is not what happened on the print, but what happened to positioning heading into it and where the analyst debate now sits heading out.

The pre-earnings short build has continued to unwind. Short interest peaked at just under 7.9 million shares in mid-October, nearly double the late-September level and the highest reading in over a year. By October 27 it had retreated to 7.46 million, equal to 1.85% of free float, down roughly 6% from the peak and down around 5.7% on the week. That confirms what the previous notes flagged: the build was a tactical hedge, not a conviction bear trade. The lending market backs that reading. Availability is effectively unlimited, with more than 315 million shares available to borrow against the 7.5 million currently lent out. Borrowing costs have dropped sharply, falling 39% over the past week to just 0.28%. The options market sits in the same relaxed register. The put/call ratio at 0.54 is below its 20-day average of 0.58, running about one standard deviation on the bullish side of normal. Nothing in the positioning data points to residual bearish pressure.

The analyst community entered results in a cautious mood, and the targets set before the print now look stretched against the current price. Morgan Stanley lowered its target to $220 from $230 in mid-October, maintaining Equal-Weight. JP Morgan cut from $270 to $235 on October 8 but held Overweight, a signal of confidence in the franchise even as near-term growth expectations were trimmed. CIBC trimmed to $225. The Street consensus target sits at $253.72, roughly 7.6% above the current $235.81 close, but that gap is narrower than it was a month ago when the July earnings round prompted a cluster of target upgrades from Barclays ($277), Stifel ($261), and UBS ($270). The picture is one of a Street that broadly owns the quality of the business but is becoming more careful about what it will pay for it. The EV/EBITDA multiple has edged down 0.3 turns over the past 30 days to 13.6x, and the P/E at 26.4x reflects the same gradual compression. Factor scores are mixed: the dividend score ranks in the 98th percentile, consistent with the bull case around the 162% year-on-year jump in planned shareholder returns, but EV/EBIT ranks at just the 18th percentile, and EPS momentum over both 30 and 90 days sits in the 37th to 41st percentile range.

The bear case centres on near-term revenue growth. Sales growth below 5% in the first half of FY26, a $14 million EBITDA headwind from lower recycled commodity prices, and margin expansion that leans on accounting reclassification rather than operational improvement are the three threads bears pull on. The bull case is simpler: the SRCL integration is improving pricing discipline, special waste backlogs and construction volumes were cited positively before the print, and a company planning to return 90% of $3.8 billion in free cash flow is not one in operational distress.

Wikipedia attention for the stock is running at a z-score of 1.71 against its own 90-day history, a notable uptick in retail interest that likely reflects the earnings event itself rather than any structural shift in investor base. Among peers, RSG fell 2.3% on the day and gained 1.2% on the week, roughly tracking WM's own 2.2% daily decline and 1.8% weekly gain. WCN was the standout performer, up 7.4% on the week even as it fell 2.5% on the day, suggesting sector sentiment is broadly positive even with earnings-day volatility. CTAS underperformed the group, dropping 4.9% on the day and 1.0% on the week.

With Q3 now behind it, the next scheduled event is Q4 results in late January 2027. The debate between now and then will likely focus on whether the commodity pricing drag moderates, whether SRCL synergies show up more clearly in core margins, and whether the pace of short interest unwinding continues or stabilises at current levels.