WCN Stock Overview
Waste Connections, Inc. provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada.
Waste Connections Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$139.72|
|52 Week High||US$148.20|
|52 Week Low||US$113.50|
|1 Month Change||-1.88%|
|3 Month Change||13.84%|
|1 Year Change||5.60%|
|3 Year Change||54.47%|
|5 Year Change||99.71%|
|Change since IPO||211.97%|
Recent News & Updates
Returns Are Gaining Momentum At Waste Connections (NYSE:WCN)
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Does Waste Connections (NYSE:WCN) Deserve A Spot On Your Watchlist?
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A Look At The Intrinsic Value Of Waste Connections, Inc. (NYSE:WCN)
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Waste Connections: I Love Trash
Waste Connections is a Dividend Contender with 12 consecutive years of dividend growth. Shares currently yield 0.65%. Waste Connections is a stable, boring, and defensive business that has served shareholders well. Waste Connections focuses on more rural markets as well as markets where they can maintain significant localized market share. Waste Connections provides a critical service to more than 6 million customers across North America. Waste Connections (WCN) is the third largest solid waste company in North America. Waste Connections differs from its competitors by focusing on secondary markets, i.e. not direct large urban centers, as well as markets where they can be the exclusive provider or at least gain a larger portion of the local market share. Waste Connections provides waste collection, transfer, disposal and recycling services across both the United States and Canada. Waste Connections serves over 6 million commercial, industrial, and residential customers in its service areas which speaks to how fragmented the industry is. WCN Locations (WCN Investor Presentation May 2022) Waste removal and disposal is one of those critical, yet boring and often overlooked businesses. I can tell you I've never espoused the virtues of my local trash collector which reinforces the fact that the business is an under-the-radar investment. WCN Capital Allocation (WCN Investor Presentation May 2022) Waste Connections has been quite aggressive on the M&A front, especially so over the 2016-2021 period. However, moving forward management appears to be preparing for share buybacks to be a larger potential source of capital return. I'm intrigued by Waste Connections and would love to add another trash company to my portfolio so it was time to take a deeper look to see if now might be the right time to pick up some shares. Dividend History A dividend payment is one of my favorite ways that a company can show that it's doing well and while rewarding shareholders. Even better is a company that can consistently increase that dividend as well. Waste Connections Dividend History (WCN Investor Relations) Waste Connections' dividend growth streak is 12 years old giving them the title of Dividend Contender. While their streak is still pretty young compared to the other trash companies, the dividend raises have been spectacular. During Waste Connections' streak, year over year dividend growth has ranged from 5.0% to 21.7% with an average of 14.1% and a median of 14.4%. There's been 7 rolling 5-year periods during that time with annualized dividend growth spanning between 12.3% and 16.2% with an average of 15.1% and a median of 15.5%. The rolling 1-, 3-, 5-, and 10-year annualized dividend growth rates from Waste Connections since 2010 can be found in the following table. Year Annual Dividend 1 Year 3 Year 5 Year 10 Year 2010 $0.050 2011 $0.210 5.00% 2012 $0.247 17.62% 2013 $0.278 12.55% 11.60% 2014 $0.318 14.39% 14.83% 2015 $0.358 12.58% 13.17% 12.35% 2016 $0.411 14.80% 13.92% 14.37% 2017 $0.500 21.65% 16.28% 15.15% 2018 $0.580 16.00% 17.45% 15.84% 2019 $0.665 14.66% 17.40% 15.90% 2020 $0.760 14.29% 14.98% 16.25% 14.28% 2021 $0.845 11.18% 13.36% 15.51% 14.94% Source: Author; Data Source: Waste Connections Investor Relations For dividend growth investors, the dividend payout ratio is an important metric to track. The payout ratio lets you know how much of a business' profits or free cash flow are committed to paying the dividend. All else being equal, the lower the payout ratio the better as there's more potential for the dividend to be increased even faster than the underlying business is able to grow. WCN Dividend Payout Ratios (WCN SEC filings) Excluding FY 2015 and FY 2020 the 10-year and 5-year average net income payout ratio for Waste Connections comes to 29.3% for both. Meanwhile the average free cash flow payout ratios are 20.1% and 21.3%. Waste Connections has plenty of capacity to continue with strong dividend increases into the future. Quantitative Quality When investing my savings I want to seek out predictable and easy to understand businesses. It doesn't get much simpler than trash collection and disposal. I want my investments to show consistent improvement across a variety of financial metrics over time. WCN Revenue Profits and Cash Flow (WCN SEC filings) Waste Connections has shown impressive growth over the last decade fueled in large part to acquisitions. Revenues grew by 270% or 15.7% annualized over that time. Gross profits lagged slightly rising 254% or 15.1% annually. Operating profits rose just 229% or 14.2% annualized lagging behind both revenues and gross profit. However, operating cash flow increased by 308% or an impressive 16.8% annually. Free cash flow improved by 263% during the last decade or 15.4% annualized slightly underperforming revenue growth. Strong businesses with some kind of moat protecting their business should be able to show at a minimum stable, and more likely rising, margins over time. I typically want to see free cash flow margins greater than 10% and take that as a sign of a business that is able to generate strong cash flow from its operations. WCN Margins (WCN SEC filings) Waste Connections' gross margins have retreated slightly over the last decade; however, they've generally been stable. The 10-year average gross margin is 42.3% with the 5-year average sitting at 40.9%. Waste Connections' free cash flow margins have varied from year to year; however, overall they've been stable and have surpassed the 10% threshold every single year. The 10-year average free cash flow margin comes to 15.2% with the 5-year average at 15.7%. Additionally I want to see a business that is efficient at generating free cash flow from its assets and invested capital. The primary metric that I track is the free cash flow return on invested capital, FCF ROIC, but I also monitor the FCF ROA and FCF ROCE. WCN Free Cash Flow Returns (WCN SEC filings) Waste Connections carries relatively low FCF ROICs some of which is explained by the acquisition heavy nature of their business. Over the last 10 years Waste Connections has averaged a 7.0% FCF ROIC with the 5-year average coming to 7.3%. To understand how Waste Connections uses its free cash flow I calculate three variations of the metric, defined below: Free Cash Flow, FCF: Operating cash flow less capital expenditures Free Cash Flow after Dividend, FCFaD: FCF less total cash dividend payments Free Cash Flow after Dividend and Buybacks, FCFaDB: FCFaD less net cash used on share repurchases WCN Free Cash Flows (WCN SEC filings) Over the last 10 years Waste Connections has generated $5.8 B in FCF which is all the more impressive considering their market capitalization 10 years ago was around $3-4 B. As we saw earlier Waste Connections has been paying and raising dividends every year over that time sending out a total of $1.2 B to shareholders. That puts the cumulative FCFaD for the last decade at $4.6 B. Waste Connections has not been a serial share repurchaser opting to continue to grow through acquisitions instead. During the last decade Waste Connections has spent a near total of just $326 M on buybacks which brings the cumulative FCFaDB to $4.3 B. Historically, Waste Connections has committed significantly more cash flow to dividends compared to buybacks by roughly a 3.7:1 ratio during the last decade. As mentioned above Waste Connections has opted for continued acquisitions rather than buybacks. WCN Shares Outstanding (WCN SEC Filings) Should acquisition opportunities slow in the future I would expect share repurchases to become a larger part of the capital allocation story for Waste Connections. As such over the last decade Waste Connections' share count has risen by 43.2% or ~4.1% annually with the bulk of the increase coming in FY 2016 and FY 2017. When I invest my savings into a business, my intention is to own the shares for a period measured in years and potentially stretching into decades. As such I want to make sure that the debt a business carries does not appear overly burdensome. WCN Debt to Capitalization (WCN SEC filings) For the most part Waste Connections' debt-to-capitalization ratio has been stable over the last decade. During that time Waste Connections' debt-to-capitalization ratio has averaged 45% with a 41% average for the most recent 5-years. While the capital structure is one way to measure the leverage on the business, I place more weight on the net debt ratios. The net debt ratios examine the levels of net debt versus some measure of profits or cash flow. It can be used to see how much claim there is on the profits that the business generates and give you an idea of how quickly the business could de-lever if need be. WCN Debt Ratios and ICR (WCN SEC filings) The 10-year average net debt-to-EBITDA, net debt-to-operating income, and net debt-to-FCF ratios are 3.9x, 2.1x, and 6.2x, respectively. Accordingly the 5-year averages are 2.9x, 6.2x, and 5.2x. Waste Connections carries a sizable amount of leverage versus the profits and cash flow the business generates; however, considering the relatively stable nature of the business they can afford to carry higher debt loads than other businesses. Valuation After finding a business that I believe is high quality, I try to value it from different perspectives to narrow down what I believe is a fair price to pay for the business. The valuation methods that I utilize are dividend yield theory, a reverse discounted cash flow model, and a minimum acceptable rate of return, "MARR", analysis. Dividend yield theory is a valuation method that centers on the concept of reversion to the mean and operates under the assumption that investors will value the business around a normal dividend yield over time. For Waste Connections I'll use the 3-year average forward dividend yield as a proxy for fair value. Waste Connections Dividend Yield Theory (WCN Investor Relations and Google Finance) Waste Connections' shares have not typically offered an attractive dividend yield; however, as we saw in the dividend section above they've been more than willing to grant very strong dividend increases. Waste Connections currently offers a forward dividend yield of 0.65% compared to the 3-year average forward dividend yield of 0.74%. Based on the current $0.23 per share per quarter payout the fair price would be around $124. Waste Connections has rarely approached the 20% undervalued band typically topping out around the 10% level. A reverse discounted cash flow analysis is a short-hand way to use a DCF model to determine if a business appears reasonably priced. Instead of making explicit assumptions about the growth and margins of the business to determine a valuation, you work backwards from the current market valuation in order to see what kind of assumptions are baked in to the current price. I use a simplified DCF model built on revenue growth, an initial free cash flow margin of 15.0% that increases to 17.5% during the forecast period. Additionally I've assumed a 3.5% terminal growth rate. For the discount rate I've used an after-tax cost of debt of 2.51% along with both a 10% and 8% cost of equity. The discount rate for the 10% cost of equity becomes 9.1% with the 8% cost of equity yielding a 7.3% discount rate. Under those assumptions Waste Connections need to grow revenues by 13.4% annually through FY 2031 in order to generate the cash flows necessary to support the current market price of $141.56 with the 9.1% discount rate scenario. The 7.3% discount rate/8% cost of equity scenario requires 7.3% annual revenue growth during the forecast period. Analysts expect Waste Connections to report FY 2022 EPS of $3.78 and FY 2023 EPS of $4.36. They also expect Waste Connections to be able to grow earnings 12.5% annually over the next 5 years. I then assumed that earnings growth would slow to 5.0% annually for the following 5 years. Dividends are assumed to target a 25% payout ratio.
|WCN||US Commercial Services||US Market|
Return vs Industry: WCN exceeded the US Commercial Services industry which returned -9.7% over the past year.
Return vs Market: WCN exceeded the US Market which returned -23.1% over the past year.
|WCN Average Weekly Movement||2.7%|
|Commercial Services Industry Average Movement||6.7%|
|Market Average Movement||6.9%|
|10% most volatile stocks in US Market||15.9%|
|10% least volatile stocks in US Market||2.8%|
Stable Share Price: WCN is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.
Volatility Over Time: WCN's weekly volatility (3%) has been stable over the past year.
About the Company
Waste Connections, Inc. provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada. It offers collection services to residential, commercial, municipal, industrial, and exploration and production (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/or 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.
Waste Connections Fundamentals Summary
|WCN fundamental statistics|
Is WCN overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|WCN income statement (TTM)|
|Cost of Revenue||US$4.00b|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||2.66|
|Net Profit Margin||10.25%|
How did WCN perform over the long term?See historical performance and comparison
0.7%Current Dividend Yield
Is WCN undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 2/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for WCN?
Other financial metrics that can be useful for relative valuation.
|What is WCN's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does WCN's PE Ratio compare to its peers?
|WCN PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
RSG Republic Services
WM Waste Management
TTEK Tetra Tech
WCN Waste Connections
Price-To-Earnings vs Peers: WCN is expensive based on its Price-To-Earnings Ratio (52.4x) compared to the peer average (35.3x).
Price to Earnings Ratio vs Industry
How does WCN's PE Ratio compare vs other companies in the US Commercial Services Industry?
Price-To-Earnings vs Industry: WCN is expensive based on its Price-To-Earnings Ratio (52.4x) compared to the US Commercial Services industry average (15.8x)
Price to Earnings Ratio vs Fair Ratio
What is WCN's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||52.4x|
|Fair PE Ratio||36.8x|
Price-To-Earnings vs Fair Ratio: WCN is expensive based on its Price-To-Earnings Ratio (52.4x) compared to the estimated Fair Price-To-Earnings Ratio (36.8x).
Share Price vs Fair Value
What is the Fair Price of WCN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: WCN ($139.72) is trading below our estimate of fair value ($190.99)
Significantly Below Fair Value: WCN is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
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How is Waste Connections forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?
Future Growth Score3/6
Future Growth Score 3/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: WCN's forecast earnings growth (15.4% per year) is above the savings rate (1.9%).
Earnings vs Market: WCN's earnings (15.4% per year) are forecast to grow faster than the US market (14.7% per year).
High Growth Earnings: WCN's earnings are forecast to grow, but not significantly.
Revenue vs Market: WCN's revenue (9% per year) is forecast to grow faster than the US market (7.6% per year).
High Growth Revenue: WCN's revenue (9% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: WCN's Return on Equity is forecast to be low in 3 years time (16.2%).
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How has Waste Connections performed over the past 5 years?
Past Performance Score2/6
Past Performance Score 2/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: WCN has high quality earnings.
Growing Profit Margin: WCN's current net profit margins (10.2%) are lower than last year (10.9%).
Past Earnings Growth Analysis
Earnings Trend: WCN's earnings have declined by 0.1% per year over the past 5 years.
Accelerating Growth: WCN's earnings growth over the past year (9.4%) exceeds its 5-year average (-0.1% per year).
Earnings vs Industry: WCN earnings growth over the past year (9.4%) underperformed the Commercial Services industry 23.6%.
Return on Equity
High ROE: WCN's Return on Equity (10%) is considered low.
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How is Waste Connections's financial position?
Financial Health Score2/6
Financial Health Score 2/6
Short Term Liabilities
Long Term Liabilities
Financial Position Analysis
Short Term Liabilities: WCN's short term assets ($1.3B) do not cover its short term liabilities ($1.3B).
Long Term Liabilities: WCN's short term assets ($1.3B) do not cover its long term liabilities ($7.2B).
Debt to Equity History and Analysis
Debt Level: WCN's net debt to equity ratio (79%) is considered high.
Reducing Debt: WCN's debt to equity ratio has increased from 69% to 82.2% over the past 5 years.
Debt Coverage: WCN's debt is well covered by operating cash flow (32.3%).
Interest Coverage: WCN's interest payments on its debt are well covered by EBIT (7.3x coverage).
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What is Waste Connections's current dividend yield, its reliability and sustainability?
Dividend Score 0/6
Cash Flow Coverage
Current Dividend Yield
Dividend Yield vs Market
Notable Dividend: WCN's dividend (0.66%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.65%).
High Dividend: WCN's dividend (0.66%) is low compared to the top 25% of dividend payers in the US market (4.57%).
Stability and Growth of Payments
Stable Dividend: WCN is not paying a notable dividend for the US market, therefore no need to check if payments are stable.
Growing Dividend: WCN is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.
Earnings Payout to Shareholders
Earnings Coverage: WCN is not paying a notable dividend for the US market.
Cash Payout to Shareholders
Cash Flow Coverage: WCN is not paying a notable dividend for the US market.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Worthing Jackman (58 yo)
Mr. Worthing F. Jackman has been Chief Executive Officer at Waste Connections, Inc. since July 2019 and has been its President since July 01, 2018. He serves as a Director at Waste Connections, Inc. since...
CEO Compensation Analysis
Compensation vs Market: Worthing's total compensation ($USD7.28M) is below average for companies of similar size in the US market ($USD13.05M).
Compensation vs Earnings: Worthing's compensation has increased by more than 20% in the past year.
Experienced Management: WCN's management team is seasoned and experienced (10 years average tenure).
Experienced Board: WCN's board of directors are seasoned and experienced ( 11.9 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: WCN insiders have only sold shares in the past 3 months.
Recent Insider Transactions
|08 Sep 22||SellUS$1,016,806||Patrick Shea||Individual||7,000||US$145.26|
|08 Aug 22||SellUS$850,657||William Razzouk||Individual||6,073||US$140.24|
|05 Aug 22||SellUS$1,174,503||Matthew Black||Individual||8,500||US$138.18|
|09 Mar 22||BuyUS$10,893||William Razzouk||Individual||83||US$131.25|
|09 Mar 22||BuyUS$11,000||William Razzouk||Individual||83.81||US$131.25|
|18 Nov 21||SellUS$172,763||Jason Craft||Individual||1,250||US$138.21|
|18 Nov 21||SellUS$172,763||Jason Craft||Individual||1,250||US$138.21|
|03 Nov 21||SellUS$344,400||James Little||Individual||2,500||US$137.76|
|01 Nov 21||SellUS$1,683,659||Darrell Chambliss||Individual||12,466||US$135.06|
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
Waste Connections, Inc.'s employee growth, exchange listings and data sources
- Name: Waste Connections, Inc.
- Ticker: WCN
- Exchange: NYSE
- Founded: 1997
- Industry: Environmental and Facilities Services
- Sector: Commercial Services
- Implied Market Cap: US$35.924b
- Shares outstanding: 257.12m
- Website: https://www.wasteconnections.com
Number of Employees
- Waste Connections, Inc.
- 6220 Highway 7
- Suite 600
- L4H 4G3
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|WCN||NYSE (New York Stock Exchange)||Yes||New Common Stock||US||USD||Jun 2016|
|WCN||TSX (The Toronto Stock Exchange)||Yes||New Common Stock||CA||CAD||Jun 2016|
|UI51||DB (Deutsche Boerse AG)||Yes||New Common Stock||DE||EUR||Jun 2016|
|WCN N||BMV (Bolsa Mexicana de Valores)||Yes||New Common Stock||MX||MXN||Jun 2016|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/09/24 00:00|
|End of Day Share Price||2022/09/23 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.