We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Waste Connections (WCN) Up 7.1% Since Earnings Report
Read MoreHide Full Article
A month has gone by since the last earnings report for Waste Connections, Inc. (WCN - Free Report) . Shares have added about 7.1% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is WCN due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Waste Connections reported better-than-expected results in fourth-quarter 2017 primarily due to solid waste internal growth, E&P waste activity and income tax benefits.
GAAP earnings for the quarter came in at $315.1 million or $1.19 per share compared with $85.6 million or 32 cents per share in the year-ago period. Such a drastic rise was substantiated by enactment of the Tax Cuts and Jobs Act of 2017, which benefited the company. GAAP earnings for full-year 2017 came in at $576.8 million or $2.18 per share compared with $246.5 million or $1.07 per share in 2016. The improvement in earnings was primarily due to solid top-line growth.
For the fourth quarter adjusted earnings came in at $137 million or 52 cents per share compared with $120.3 million or 46 cents per share, beating the Zacks Consensus Estimate of 49 cents. For 2017, adjusted earnings came in at $570.7 million or $2.16 per share compared with $395.2 million or $1.71 per share a year ago. The upside was primarily driven by growth in solid waste volumes, E&P waste activity and recycled commodity prices.
Revenues for the quarter improved to $1,157.2 million from $1,048.6 million and exceeded the Zacks Consensus Estimate of $1,125 million. Revenues for 2017 improved to $4,630.5 million from $3,375.9 million in the prior year. The year-over-year rise in the top line was driven by the accretive Progressive Waste acquisition.
Operating income for the fourth quarter was $175 million compared with $139.2 million in year- ago period. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the reported quarter increased to $360.7 million from $325.4 million in the prior-year period.
Segmental Performance
Solid Waste Collection segment was the highest contributor to total revenues in the fourth quarter at 69%. The segment’s revenues increased significantly from $737.8 million in the year-earlier quarter to $798.2 million.
Solid Waste Disposal and Transfer contributed 20.6% to overall revenues in the quarter. Quarterly revenues increased to $238.1 million from $214.8 million in the prior-year quarter.
Solid Waste Recycling revenues decreased to $28.6 million (2.4% of total revenue) from $29.2 million a year ago.
E&P Waste Treatment, Recovery and Disposal segment revenues increased to $53.3 million (4.6% of total revenues) from $32.2 million.
Finally, Intermodal and Other contributed 3.4% to total revenues and increased to $39 million from $34.7 million in the prior-year quarter.
Balance Sheet and Cash Flow
Waste Connections had cash and cash equivalents of $433.8 million as of Dec 31, 2017 compared with $154.4 in the year-ago period. Net cash inflow from operating activities amounted to $1,187.3 million at the year-end 2017 compared with $795.3 million in the year-ago period.
Long-term debt increased to $3,899.6 million at year-end 2017from $3,616.8 million in the year-prior period.
In 2017, adjusted free cash flow was $763.9 million or 16.5% of revenues compared with $550.9 million or 16.3% of revenues in 2016.
2018 Guidance
For 2018, Waste Connections anticipates revenues of approximately $4.8 billion excluding additional acquisitions. The company expects adjusted EBITDA to increase 60 basis points on year-over-year basis.
In 2018, the company expects net cash inflow from operating activities to be approximately $1.4 billion or 28% of revenues.
For 2018, adjusted free cash flow is expected to be approximately $850 million or 17.6% of revenues.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
At this time, WCN has an average Growth Score of C, however its Momentum is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than growth investors.
Outlook
WCN has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Waste Connections (WCN) Up 7.1% Since Earnings Report
A month has gone by since the last earnings report for Waste Connections, Inc. (WCN - Free Report) . Shares have added about 7.1% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is WCN due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Waste Connections Beats Q4 Earnings, Revenues Rise
Waste Connections reported better-than-expected results in fourth-quarter 2017 primarily due to solid waste internal growth, E&P waste activity and income tax benefits.
GAAP earnings for the quarter came in at $315.1 million or $1.19 per share compared with $85.6 million or 32 cents per share in the year-ago period. Such a drastic rise was substantiated by enactment of the Tax Cuts and Jobs Act of 2017, which benefited the company. GAAP earnings for full-year 2017 came in at $576.8 million or $2.18 per share compared with $246.5 million or $1.07 per share in 2016. The improvement in earnings was primarily due to solid top-line growth.
For the fourth quarter adjusted earnings came in at $137 million or 52 cents per share compared with $120.3 million or 46 cents per share, beating the Zacks Consensus Estimate of 49 cents. For 2017, adjusted earnings came in at $570.7 million or $2.16 per share compared with $395.2 million or $1.71 per share a year ago. The upside was primarily driven by growth in solid waste volumes, E&P waste activity and recycled commodity prices.
Revenues for the quarter improved to $1,157.2 million from $1,048.6 million and exceeded the Zacks Consensus Estimate of $1,125 million. Revenues for 2017 improved to $4,630.5 million from $3,375.9 million in the prior year. The year-over-year rise in the top line was driven by the accretive Progressive Waste acquisition.
Operating income for the fourth quarter was $175 million compared with $139.2 million in year- ago period. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the reported quarter increased to $360.7 million from $325.4 million in the prior-year period.
Segmental Performance
Solid Waste Collection segment was the highest contributor to total revenues in the fourth quarter at 69%. The segment’s revenues increased significantly from $737.8 million in the year-earlier quarter to $798.2 million.
Solid Waste Disposal and Transfer contributed 20.6% to overall revenues in the quarter. Quarterly revenues increased to $238.1 million from $214.8 million in the prior-year quarter.
Solid Waste Recycling revenues decreased to $28.6 million (2.4% of total revenue) from $29.2 million a year ago.
E&P Waste Treatment, Recovery and Disposal segment revenues increased to $53.3 million (4.6% of total revenues) from $32.2 million.
Finally, Intermodal and Other contributed 3.4% to total revenues and increased to $39 million from $34.7 million in the prior-year quarter.
Balance Sheet and Cash Flow
Waste Connections had cash and cash equivalents of $433.8 million as of Dec 31, 2017 compared with $154.4 in the year-ago period. Net cash inflow from operating activities amounted to $1,187.3 million at the year-end 2017 compared with $795.3 million in the year-ago period.
Long-term debt increased to $3,899.6 million at year-end 2017from $3,616.8 million in the year-prior period.
In 2017, adjusted free cash flow was $763.9 million or 16.5% of revenues compared with $550.9 million or 16.3% of revenues in 2016.
2018 Guidance
For 2018, Waste Connections anticipates revenues of approximately $4.8 billion excluding additional acquisitions. The company expects adjusted EBITDA to increase 60 basis points on year-over-year basis.
In 2018, the company expects net cash inflow from operating activities to be approximately $1.4 billion or 28% of revenues.
For 2018, adjusted free cash flow is expected to be approximately $850 million or 17.6% of revenues.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
Waste Connections, Inc. Price and Consensus
Waste Connections, Inc. Price and Consensus | Waste Connections, Inc. Quote
VGM Scores
At this time, WCN has an average Growth Score of C, however its Momentum is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than growth investors.
Outlook
WCN has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.