S&P/ASX 200 Index (ASX: XJO) stock Cleanaway Waste Management Ltd (ASX: CWY) is well-placed to outperform in FY 2026.
That's according to the team at Macquarie Group Ltd (ASX: MQG).
Shares in the waste management and environmental services company closed down 0.7% on Friday, trading for $2.79 apiece.
That sees Cleanaway shares up 5.2% in 2025.
Shares remain down 5.5% over 12 months, though those losses will have been softened by the 6.0 cents per share in fully franked dividends the ASX 200 stock paid out over the full year.
At Friday's closing price, Cleanaway shares trade on a fully franked dividend yield (part trailing, part pending) of 2.2%.
Atop the upcoming FY 2026, dividends, Macquarie also expects a significant uptick in Cleanaway shares.
Here's why.
ASX 200 stock delivers FY 2025 earnings growth
Cleanaway reported its FY 2025 results on Wednesday, 20 August, with Macquarie noting those results were broadly in line with its expectations.
Highlights from the financial year just past included a 3.4% year-on-year increase in net revenue to $3.30 billion. Management credited this to the strong performance of the ASX 200 stock's Solid Waste Services segment.
Underlying earnings (EBIT) $411.8 million were up 14.6% from FY 2024, with the company's EBIT margin of 12.5% setting a new record high, up 1.30% from FY 2024.
On the bottom line, Cleanaway delivered underlying net profit after tax (NPAT) of $198 million, up 16.1%.
Management declared a final fully franked dividend of 3.2 cents per share, up 23% from last year's final Cleanaway dividend. That passive income payout is still up for grabs. The ASX 200 stock trades ex-dividend on 12 September.
What's ahead for Cleanaway shares in FY 2026?
Looking to what could impact the ASX 200 stock in the financial year ahead, Cleanaway CEO Mark Schubert said, "FY26 is going to be a year of delivery and integration."
Schubert added:
We are on track to deliver our mid-term ambition of more than $450 million EBIT, excluding acquisitions. We will also progress the integration of both Citywide and Contract Resources, whose collective EBIT contribution of approximately $30 million supports our guidance range of between $470 million and $500 million.
Addressing that FY 2026 guidance, Macquarie noted this was "a bit softer than we had expected".
But the broker has a bullish outlook for the stock.
According to Macquarie:
Management are executing well. Recognition has been slow, but developments in the EfW [Energy-from-Waste] space reinforce the broadly positive backdrop in the industry and CWY's leadership in it. An improving macro backdrop and further monetary policy support can only help.
Connecting the dots, the broker said:
The CWY investment thesis is an attractive one, underpinned by a solid EPS growth outlook, attractive valuation comparisons to US peers, a broadly supportive macro and regulatory backdrop and a growing track record of delivery on the part of management.
Macquarie has an outperform rating on the ASX 200 stock with a 12-month target price of $3.50 a share.
That represents a potential upside of 25.5% from Friday's closing Cleanaway share price. And it doesn't include those upcoming FY 2026 dividends.
