Last Update 09 Dec 25

WCN: Margin Expansion Will Be Driven By M&A And Aggressive Buybacks

Analysts have nudged their blended price target for Waste Connections modestly higher to about $205 per share, citing the company’s consistent outperformance versus quarterly expectations, a robust M&A pipeline, and its positioning as a high quality compounder with solid waste margin expansion and free cash flow inflection potential despite near term sector headwinds.

Analyst Commentary

Recent Street research on Waste Connections reflects a generally constructive stance, with most firms either initiating at positive ratings or modestly raising price targets while acknowledging pockets of execution and macro risk.

Bullish Takeaways

Bullish analysts highlight the company as a high quality compounder, citing a long runway for value accretive M&A and consolidation in secondary and rural markets that can support above sector growth and multiple resilience.
Several notes point to the runway for outsized solid waste margin expansion into FY26 as investments in technology, infrastructure, and vertical integration begin to translate into structurally better price retention, productivity, and free cash flow inflection.
Commentary emphasizes the company’s consistent pattern of beating quarterly expectations and issuing in line or better forward outlooks. This reinforces confidence in management execution and underpins incremental price target increases around the low 200 dollar range.
Analysts also view current commodity and relative valuation levels as near trough, arguing that a recovery in recycled cardboard pricing and continued buybacks can act as catalysts for multiple expansion and positive estimate revisions.

Bearish Takeaways

Bearish analysts, while often still positive on the stock, are trimming outer year expectations as timing for new RNG project contributions shifts. This tempers near term growth assumptions embedded in higher price targets.
Some research flags ongoing headwinds in portions of the environmental services business without strong pricing power, noting that weaker specialty waste volumes and lower recycled cardboard prices constrain near term earnings leverage.
There is caution that, despite solid core performance, the sector wide pullback and macro uncertainty could limit near term re rating, keeping some price targets and ratings more neutral versus peers.
A subset of views remain Equal Weight, reflecting concern that much of the quality and consolidation story is already reflected in the valuation, leaving less margin for error if free cash flow or M&A execution falls short of expectations.

What's in the News

Issued new earnings guidance for fourth quarter 2025, projecting approximately $2.36 billion in revenue and reaffirming confidence in achieving its full year 2025 outlook as previously provided in July (company guidance).
Completed a share repurchase tranche between July 22, 2025 and September 30, 2025, buying back 569,660 shares, or about 0.22% of shares outstanding, for $103.3 million under the July 24, 2025 authorization (buyback update).
Completed another tranche of its ongoing buyback program from July 1, 2025 to August 11, 2025, repurchasing 1,821,591 shares, or roughly 0.71% of shares outstanding, for $338.49 million under the August 8, 2024 authorization (buyback update).
The Board of Directors approved an 11.1% increase in the regular quarterly dividend to $0.35 per share, payable November 20, 2025, to shareholders of record as of November 5, 2025 (dividend announcement).

Valuation Changes

Fair Value Estimate remained unchanged at approximately $205 per share, indicating no revision to the intrinsic value assessment.
Discount Rate edged down slightly from 6.89% to 6.89%, implying a marginally lower required return in the valuation model.
Revenue Growth increased slightly from 6.46% to 6.47%, reflecting a modestly more optimistic long term growth outlook.
Net Profit Margin ticked down fractionally from 13.76% to 13.76%, suggesting a virtually unchanged profitability profile.
Future P/E was effectively unchanged, moving marginally from 40.13x to 40.12x, indicating a stable long term valuation multiple assumption.

Effective pricing and acquisition strategies, along with strong employee retention, position Waste Connections for robust revenue and margin growth.
Enhanced safety performance and strategic recycling facility integration contribute to cost savings and expanded service capabilities, supporting future growth.
Heavy reliance on acquisitions and volatile commodity-driven revenues pose risks to margins, while weather events and geopolitical factors add uncertainty to future earnings.

Catalysts

About Waste Connections

Provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada.What are the underlying business or industry changes driving this perspective?

Waste Connections’ pricing strategy has shown strong execution with a price-led organic solid waste growth, resulting in high visibility for full-year 2025 core pricing of at least 6%, which is expected to positively impact their revenue.
The company’s reduction in voluntary turnover and improved employee retention for ten consecutive quarters indicate a healthier company environment, likely supporting operating efficiencies and margin expansion, thereby positively impacting net margins.
Record safety performance and reduced incident rates are anticipated to unlock incremental cost savings in future periods, contributing to cost control and improved adjusted EBITDA margins.
Robust acquisition activity, with annualized revenues closed already over $125 million, and a strong balance sheet position Waste Connections well for continued growth and successful integration of acquisitions, supporting future revenue and earnings growth.
The integration of a strategic state-of-the-art recycling facility in New Jersey is expected to complement their expanding New York City franchise, potentially enhancing service capabilities and driving revenue growth.

Waste Connections Earnings and Revenue Growth

Waste Connections Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Waste Connections's revenue will grow by 7.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 7.0% today to 14.6% in 3 years time.
Analysts expect earnings to reach $1.7 billion (and earnings per share of $6.62) by about September 2028, up from $643.8 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $1.4 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 39.7x on those 2028 earnings, down from 70.9x today. This future PE is greater than the current PE for the US Commercial Services industry at 25.7x.
Analysts expect the number of shares outstanding to decline by 0.23% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.77%, as per the Simply Wall St company report.

Waste Connections Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The protracted weather events in many markets caused incremental volume weakness, indicating potential risks to future revenue and margins if severe weather becomes more frequent.
Despite generally favorable conditions, the discussion of geopolitical factors such as tariffs suggests there could be unexpected capital or expense increases in the future, which may impact earnings.
The company's growth strategy relies heavily on acquisitions, which could pressure net margins if integration challenges arise or if acquisition synergies do not materialize as expected.
Concerns about potential changes in interest rates and financial market fluctuations indicate a risk to financing costs and capital expenditures, potentially affecting net income.
Commodity-driven revenues remain volatile, with factors such as changes in OCC and RIN prices affecting financial results, which could lead to unpredictable impacts on revenue and margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $210.947 for Waste Connections 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 $227.0, and the most bearish reporting a price target of just $150.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $11.3 billion, earnings will come to $1.7 billion, and it would be trading on a PE ratio of 39.7x, assuming you use a discount rate of 6.8%.
Given the current share price of $177.61, the analyst price target of $210.95 is 15.8% 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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Update Price Target as Waste Connections Announces Dividend Increase and Share Repurchases