Shares in Cleanaway Waste Management Ltd (ASX: CWY) have slipped to their lowest level in more than 2 years.
On Wednesday, the Cleanaway share price fell 2.03% to $2.41, after touching an intraday low of $2.38. That marks the lowest closing price for the stock since early November 2023 and extends its recent slide to around 7% over the past month.
The move comes despite Cleanaway operating in a traditionally defensive sector, where earnings are usually more resilient during periods of economic uncertainty.
What does Cleanaway actually do
Cleanaway is Australia's largest waste management and environmental services provider. The company employs more than 10,000 people and operates across over 350 sites in Australia, New Zealand and the Middle East.
Its services include municipal waste collection, recycling, landfill operations, liquid waste treatment and industrial services. Because waste still needs to be collected regardless of economic conditions, Cleanaway is typically viewed as a defensive industrial stock.
Why the share price is under pressure
There has been no single negative announcement behind the latest drop. Instead, a combination of smaller factors appears to be weighing on investor sentiment.
Brokers have pointed to softer trading conditions early in FY26, which has tempered near term expectations. As a result, earnings are now expected to skew more heavily toward the second half of the year.
Cleanaway has also underperformed the broader S&P/ASX 200 Index (ASX: XJO) over the past year. That kind of underperformance often pushes investors toward stronger stocks and can reinforce selling pressure.
A look at the share price
The chart shows Cleanaway shares remain in a clear downtrend.
The stock is trading below its long-term moving averages and recently broke below support in the mid $2.40 range. The $2.38 level now becomes an important area to watch. If that level holds, it could signal that selling pressure is easing.
In addition, the relative strength index (RSI) is moving toward levels that often suggest a stock is becoming oversold.
The fundamentals still look steady
Despite the weak share price, Cleanaway's underlying business remains relatively stable.
Analysts are forecasting modest revenue and earnings growth over the coming years, supported by population growth, infrastructure activity and increasing environmental regulation. The company continues to focus on operational efficiency and cost control.
The dividend yield sits around 3%, which is not huge but has been reasonably consistent. While is not a high growth stock, it does offer predictable cash flows compared with many other industrial businesses.
What brokers think
Broker sentiment remains broadly supportive. Several major brokers currently rate Cleanaway as a 'buy' or 'outperform', with price targets generally clustered between $3.10 and $3.30.
From current levels, that implies potential upside of roughly 30%, assuming earnings recover as expected.
Some analysts also highlight the strategic value of Cleanaway's assets, noting that waste management infrastructure is difficult to replicate.
Foolish takeaway
The downtrend may not be over yet, but current prices may appeal to investors seeking exposure to a defensive industrial business with steady demand.
Some patience may be required, though the recent pullback could prove attractive for longer term investors.
