Produced Water Disposal And Metals Recycling Will Fuel Canadian Success

Key Takeaways

• Long-term contracts, technology investment, and strategic acquisitions enhance recurring revenue, pricing power, and operational efficiency amid robust industrial demand.
  
• Regulatory pressures and high-barrier assets drive market share gains, premium pricing, and improved cash flow through differentiated waste management solutions.
  
• Heavy reliance on oil and gas and regional concentration increase vulnerability to regulatory, economic, and environmental risks, threatening revenue stability and long-term growth.

Catalysts

Engages in the waste management and energy infrastructure businesses primarily in Canada and the United States.

• Expected commissioning of new pipe-connected produced water disposal facilities-supported by 10-year contracts with major clients-should drive stable, high-margin recurring revenue growth as industrial and energy sector activity remains robust.
  
• Accelerating regulatory requirements for environmental compliance are pushing producers to outsource waste management, allowing SECURE to capture market share and command premium pricing, further supporting top-line and margin expansion.
  
• Ongoing investment in proprietary waste treatment and recycling technologies differentiates SECURE from competitors, enabling value-added service offerings and higher EBITDA through both organic volume growth and pricing power.
  
• Industry consolidation and scale advantages, enabled by recent acquisitions and an expanded railcar fleet, are expected to improve operational efficiencies in the metals recycling segment and drive EBITDA margin recovery once macro headwinds subside.
  
• Resilient infrastructure network across high-barrier, strategically located assets positions SECURE to leverage rising urbanization and industrial activity in North America, with underlying volume growth translating to increased recurring revenue and better cash flow visibility.

SECURE Waste Infrastructure Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming SECURE Waste Infrastructure's revenue will decrease by 70.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from 1.9% today to 96.6% in 3 years time.
• Analysts expect earnings to reach CA$254.0 million (and earnings per share of CA$1.17) by about August 2028, up from CA$197.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting CA$337 million in earnings, and the most bearish expecting CA$184.3 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.1x on those 2028 earnings, down from 17.6x today. This future PE is greater than the current PE for the CA Oil and Gas industry at 12.4x.
• Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.31%, as per the Simply Wall St company report.

SECURE Waste Infrastructure Future Earnings Per Share Growth

Risks

• SECURE Waste Infrastructure remains heavily concentrated in the oil and gas sector-if the long-term global energy transition continues to accelerate and upstream activity structurally declines, the company faces persistent volume pressure in its core waste and produced water business, threatening long-term revenue growth and EBITDA stability.
  
• The metals recycling segment is facing significant macro headwinds including U.S. steel tariffs, trade policy uncertainty, and soft global demand; sustained or heightened trade barriers, tariff extensions, or further price weakness could erode segment profitability and drag company-wide margins and earnings.
  
• SECURE's expansion strategy is largely focused on Western Canada and the Alberta/Montney region-any regional regulatory tightening, local economic downturns, climate risks (like escalating wildfires), or increased competition could constrain growth opportunities and increase earnings volatility.
  
• Increasing regulatory scrutiny, heightened ESG expectations, and new sustainability frameworks may further elevate compliance costs, expose the company to unexpected legal/environmental liabilities, or restrict access to capital-negatively impacting future net margins and increasing funding costs.
  
• The company's acquisition-driven growth in metals recycling is still undergoing integration with expected synergies 12–18 months out; delays in realizing cost and revenue synergies or overpaying for distressed assets in a weak market could diminish return on investment and restrain future earnings growth.

Valuation

• The analysts have a consensus price target of CA$18.111 for SECURE Waste Infrastructure based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$20.0, and the most bearish reporting a price target of just CA$16.25.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CA$262.9 million, earnings will come to CA$254.0 million, and it would be trading on a PE ratio of 15.1x, assuming you use a discount rate of 6.3%.
  
• Given the current share price of CA$15.8, the analyst price target of CA$18.11 is 12.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.