The waste management market is on the brink of immense growth, fueled by increasing construction and demolition activities and the soaring demand for waste management services in emerging nations. A study by Market Research Future predicts the U.S. waste management market will hit $284.90 billion by 2032, with a robust CAGR of 8%.

Amid this growth, Waste Connections, Inc. (WCN) emerges as a pioneer, championing sustainable and environmentally conscious waste management practices. Not only has WCN showcased strong fiscal third-quarter results, but it has also strategically aligned its operations to achieve sustainability and ESG goals while delivering value to its investors.

In an exemplary move, WCN unveiled its 2024 Sustainability Report, titled Connecting with the Sustainable Future. The report highlights milestones such as reducing absolute emissions by 13% and lowering Scope 1 and 2 emissions intensity by over 40% compared to the 2019 baseline.

WCN has also made remarkable strides in recycling, biogas recovery, and beneficial reuse through investments in new facilities. This focus has resulted in tangible benefits, including a 13% decrease in incident rates since 2022. Such initiatives cement WCN’s commitment to environmental progress and reinforce its leading position in the industry.

The company’s efforts resonate not only in its operations but also in its stock performance. Over the past nine months, WCN’s stock climbed 1.2%, and over the past year, it delivered an impressive gain of 18.2%, closing the last trading session at $174.13.

Now, let us delve deeper into the factors that could propel its performance even further.

Sound Historical Growth

Over the past three years, WCN has demonstrated consistent growth across key financial metrics. Its revenue grew at a CAGR of 13.6%, while EBITDA rose at a 12.8% CAGR. Operational income (EBIT) and total assets expanded at CAGRs of 13.9% and 12.1%, respectively.

Notably, net income surged at a CAGR of 17.3%, and EPS climbed even higher at 17.9%, showcasing robust profitability.

Strong Financials

For the fiscal 2024 third quarter that ended September 30, WCN’s revenues increased 13.3% year-over-year to $2.34 billion. Its operating income grew 34.7% from the year-ago value to $475.34 million. WCN’s adjusted EBITDA grew 17.3% from the prior year’s quarter to $787.44 million.

In addition, adjusted net income attributable to WCN increased 15.5% year-over-year to $350 million. Meanwhile, adjusted earnings per common share attributable to WCN common shareholders grew 15.4% from the previous year’s period to $1.35.

As of September 30, 2024, WCN’s cash and cash equivalents amounted to $115.27 million, compared to $78.40 million on December 31, 2023.

Favorable Analyst Estimates

Analysts predict WCN’s revenue and EPS for the fiscal fourth quarter ending December 2024 to increase 10.4% and 8.4% year-over-year to $2.25 billion and $1.20, respectively. The company has exceeded the consensus EPS estimates in each of the four trailing quarters, which is noteworthy.

For the fiscal year ending December 2024, WCN’s revenue and EPS are expected to rise 11% and 15.2% from the previous year, reaching $8.91 billion and $4.83, respectively.

Plus, looking ahead to fiscal 2025, analysts anticipate further growth, with revenue and EPS forecasted to rise by 7.5% and 12.1% from the prior year, reaching $9.58 billion and $5.41, respectively.

High Profitability

WCN’s trailing-12-month gross profit margin of 41.78% is 31.2% higher than the industry average of 31.84%. Its trailing-12-month EBITDA margin stands at 30.23%, 114.9% higher than the industry average of 14.06%.

In addition, the company boasts a trailing-12-month net income margin of 10.81%, which is 67% higher than the sector average of 6.47%. Also, the stock’s trailing-12-month levered FCF margin of 11.05% outperforms the industry average of 6.78% by 63%.

POWR Ratings Reflects Optimism

WCN’s stable fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

WCN has a B grade for Quality, supported by profitability measures that exceed industry benchmarks. Furthermore, the company has a B grade for Stability, reflecting its 24-month beta of 0.60.

Within the Waste Disposal industry, WCN is ranked #5 out of 13 stocks. Beyond what is stated above, we have also given WCN grades for Momentum, Sentiment, Growth, and Value. Get all WCN ratings here.

Bottom Line

WCN has strengthened its position as a leading figure in the waste disposal and management sector owing to its industry-leading sustainability practices, which are actively trying to make the world a better place by reducing emissions and protecting the environment.

So, considering WCN’s high profitability, strong financials, optimistic analyst estimates, and low volatility, now might be the ideal time to consider adding WCN to one’s investment portfolio.

How Does Waste Connections, Inc. (WCN) Stack Up Against Its Peers?

Although WCN’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who also exhibit strong POWR Ratings. So, consider these B (Buy) rated stocks from the Waste Disposal industry:

Republic Services, Inc. (RSG)

Clean Harbors, Inc. (CLH)

Concrete Pumping Holdings, Inc. (BBCP)

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WCN shares rose $0.48 (+0.28%) in premarket trading Friday. Year-to-date, WCN has gained 17.45%, versus a 24.47% rise in the benchmark S&P 500 index during the same period.

About the Author: Aanchal Sugandh

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns. More...

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