Waste management company Casella (NASDAQ: CWST) beat Wall Street’s revenue expectations in Q2 CY2026, with sales up 16.9% year on year to $543.7 million. The company’s full-year revenue guidance of $2.1 billion at the midpoint came in 1.3% above analysts’ estimates. Its non-GAAP profit of $0.40 per share was 36.1% above analysts’ consensus estimates.

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“We delivered another quarter of solid financial and operating performance as our teams continued to execute at a high level across the business,” said Ned Coletta, President and CEO of Casella Waste Systems, Inc.

Company Overview

Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ: CWST) offers waste management services for businesses, residents, and the government.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Casella Waste Systems’s sales grew at an incredible 19.3% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Casella Waste Systems’s annualized revenue growth of 16.9% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, Casella Waste Systems reported year-on-year revenue growth of 16.9%, and its $543.7 million of revenue exceeded Wall Street’s estimates by 3.5%.

Looking ahead, sell-side analysts expect revenue to grow 10.4% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is admirable and implies the market sees success for its products and services.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Casella Waste Systems was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.3% was weak for an industrials business. This result is surprising given its high gross margin as a starting point.

Analyzing the trend in its profitability, Casella Waste Systems’s operating margin decreased by 5.2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Casella Waste Systems’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Casella Waste Systems generated an operating margin profit margin of 3.7%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Casella Waste Systems’s EPS grew at a decent 8.4% compounded annual growth rate over the last five years. However, this performance was lower than its 19.3% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into Casella Waste Systems’s earnings to better understand the drivers of its performance. As we mentioned earlier, Casella Waste Systems’s operating margin was flat this quarter but declined by 5.2 percentage points over the last five years. Its share count also grew by 23.5%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Casella Waste Systems, its two-year annual EPS growth of 38.3% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q2, Casella Waste Systems reported adjusted EPS of $0.40, up from $0.36 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Casella Waste Systems’s full-year EPS to shrink by 1.9% from $1.32 to $1.30.

Key Takeaways from Casella Waste Systems’s Q2 Results

It was good to see Casella Waste Systems beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its full-year EBITDA guidance was in line. Overall, we think this was a decent quarter with some key metrics above expectations. The market seemed to be hoping for more, and the stock traded down 2.3% to $88.50 immediately following the results.

So should you invest in Casella Waste Systems right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).