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Why Is Waste Connections (WCN) Up 14.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Waste Connections (WCN - Free Report) . Shares have added about 14.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Waste Connections due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Waste Connections Surpasses Q4 Earnings & Revenues Estimates

Waste Connections reported solid fourth-quarter 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate.

Adjusted earnings of 83 cents per share beat the Zacks Consensus Estimate by 2.5% and increased 22.1% year over year. Revenues of $1.62 billion topped the consensus mark by 2.5% and rose 16.2% year over year.

Acquisitions contributed $79.4 million to revenues in the reported quarter.

Revenues by Segment

The Solid Waste Collection segment’s revenues increased 14.3% year over year to $1.17 billion.

The Solid Waste Disposal and Transfer segment’s revenues increased 7.9% from the year-ago quarter’s level to $316.17 million.

The Solid Waste Recycling segment’s revenues surged more than 100% year over year to $69.67 million.

The Intermodal and Other segment’s revenues increased 12.4% to $37.51 million.

The E&P Waste Treatment, Recovery and Disposal segment’s revenues soared 34.5% from the year-ago quarter’s level to $34.33 million. 

Operating Results

Adjusted EBITDA in the reported quarter was $495.4 million, up 16.1% from the year-ago quarter’s level. Adjusted EBITDA margin came in at 30.5%, flat with the year-ago quarter.

Operating income totaled $249.32 million, up 26.5% from the prior-year quarter.

Balance Sheet and Cash Flow

Waste Connections exited fourth-quarter 2021 with cash and cash equivalents of $147.44 million compared with $339.48 million at the end of the prior quarter. Long-term debt was $5.04 billion compared with $4.87 billion at the end of the last-reported quarter.

The company generated $428.27 million of cash from operating activities in the reported quarter. Adjusted free cash flow was $183.76 million. Capital expenditures totaled $264.84 million.

WCN paid out dividends worth $59.4 million in the reported quarter.

2022 Guidance

For the full year, Waste Connections expects revenues to be around $6.875 billion. Adjusted EBITDA is expected to be at around $2.145 billion. Capital expenditures are estimated at around $850 million. Net cash from operating activities is estimated at around $2 billion. Adjusted free cash flow is estimated at around $1.15 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Waste Connections has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Waste Connections has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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