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.