Discounted Cash Flow Calculation for DB:UI51 using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:UI51 DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Waste Connections's share price is below the future cash flow value, but not at a moderate discount (< 20%).
Waste Connections's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Waste Connections's earnings available for a low price, and how does
this compare to other companies in the same industry?
Waste Connections's earnings are expected to grow by 11.8% yearly, however this is not considered high growth (20% yearly).
Waste Connections's revenue is expected to grow by 6.5% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Waste Connections's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
2/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Waste Connections's finances.
The net worth of a company is the difference between its assets and liabilities.
Waste Connections is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Waste Connections's long term commitments exceed its cash and other short term assets.
This treemap shows a more detailed breakdown of
Waste Connections's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Debt is not covered by short term assets, assets are 0.3x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Worthing F. Jackman has served as a Principal Executive Officer since February 2019 and has been President at Waste Connections, Inc. since July 01, 2018. He was Chief Financial Officer and Executive Vice President of Waste Connections, Inc. from September 1, 2004 to July 01, 2018 and served as its Assistant Secretary. Mr. Jackman oversees all finance, treasury, accounting, tax, internal audit and investor relations functions for Waste Connections Inc. He serves as a lead banker and advisor on several of Waste Connections Inc.'s capital markets transactions and strategic issues since inception. He served as a Vice President of Finance and Investor Relations of Waste Connections, Inc. from April 28, 2003 to September 1, 2004. He served as Managing Director in the Global Industrial and Environmental Services Group at Deutsche Bank Securities (previously Alex. Brown & Sons) where he provided investment banking services to companies in many sectors including solid waste services. He has been a Director of Quanta Services, Inc. since May 2005. Mr. Jackman holds a B.S. Degree in Finance from Syracuse University and an M.B.A. degree from the Harvard Business School.
Worthing's compensation has been consistent with company performance over the past year.
Worthing's remuneration is lower than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Waste Connections management team is over 5 years, this suggests they are a seasoned and experienced team.
President & Principal Executive Officer
Chairman & CEO (Leave of Absence)
COO & Executive VP
Senior VP & CFO
Chief Accounting Officer & Senior VP
Senior VP & Chief Information Officer
Senior Vice President of Sales & Marketing
Vice President of People
Senior Vice President of Engineering & Disposal
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Waste Connections board of directors is over 10 years, this suggests they are a seasoned and experienced board.
Waste Connections, Inc. provides waste collection, transfer, disposal, and recycling services in the United States and Canada. The company operates through six segments: Southern, Western, Eastern, Canada, Central, and Exploration and Production (E&P). It offers collection services to residential, commercial, municipal, industrial, and E&P customers; landfill disposal services; and recycling services for various recyclable materials, including compost, cardboard, mixed paper, plastic containers, glass bottles, and ferrous and aluminum metals. The company also owns and operates transfer stations that receive compact and load waste to be transported to landfills or treatment facilities through truck, rail, or barge; and intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest through a network of intermodal facilities. In addition, it provides E&P waste treatment, recovery, and disposal services for waste resulting from oil and natural gas exploration and production activity, such as drilling fluids, drill cuttings, completion fluids, and flowback water; production wastes and produced water during a well’s operating life; contaminated soils that require treatment during site reclamation; and substances that require clean-up after a spill, reserve pit clean-up, or pipeline rupture. Further, the company offers container and chassis sales and leasing services to its customers. As of December 31, 2018, it owned or operated a network of 279 solid waste collection operations; 113 transfer stations; 56 municipal solid waste (MSW) landfills; 11 E&P waste landfills; 14 non-MSW landfills; 64 recycling operations; 4 intermodal operations; 22 E&P liquid waste injection wells; and 19 E&P waste treatment and oil recovery facilities. It also operated additional 49 transfer stations, 12 MSW landfills, and 2 intermodal operations. Waste Connections, Inc. was founded in 1997 and is based in Vaughan, Canada.
Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.