Waste Connections, Inc. (WCN Quick QuoteWCN - Free Report) shares have had an impressive run on the bourses so far this year. The stock has appreciated 32.2% over the past year against the 5.8% decline of the industry it belongs to.

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The company recently reported third-quarter 2021 adjusted earnings per share of 89 cents, which beat the Zacks Consensus Estimate by 4.7% and increased 23.6% year over year. Revenues of $1.6 billion topped the consensus mark by 1.8% and rose 14.9% year over year.

How is Waste Connections Doing?

Waste Connections has been active on the acquisition front. It follows a strategic combination of financial, market and management criteria to evaluate opportunities from acquisitions. In new markets or adjacent markets, it uses its initial buyout as an operating base and seeks to strengthen the acquired operation's presence by providing additional services, adding customers and making “tuck-in” acquisitions of other waste companies. In 2020, the company completed the purchase of 21 individually immaterial non-hazardous solid waste collection, recycling, transfer and disposal businesses. Previously, the company completed 21 acquisitions in 2019, 20 in 2018, 14 in 2017 and 12 in 2016. Some of the notable acquisitions include those of American Disposal Services and certain affiliates, Groot Industries, and Progressive Waste. Notably, in third-quarter 2021, acquisitions contributed $51.4 million to revenues.

We appreciate Waste Connections’ focus on secondary and rural markets to garner a higher local market share, which would be difficult to attain in more competitive urban markets. This decreases the company’s exposure to customer churn and helps improve financial returns. The company focuses on increasing market penetration and offering additional services to capitalize on future drilling opportunities in those areas.

The company enjoys optimal asset positioning as its disposal sites are at prime locations, which helps it generate higher profitability. Considering the importance of costs associated with the transportation of waste to treatment and disposal sites, having a disposal capacity close to the waste stream offers a competitive advantage.

Waste Connections’ cash and cash equivalent balance of $339.5 million at the end of the third-quarter 2021 was well below the long-term debt level of $4.87 billion underscoring that the company doesn’t have enough cash to meet this debt burden.

Zacks Rank and Stocks to Consider

Waste Management currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Business Services sector are Avis Budget (CAR Quick QuoteCAR - Free Report) and Cross Country Healthcare (CCRN Quick QuoteCCRN - Free Report) ), both sporting a Zacks Rank #1, and Charles River Associates (CRAI Quick QuoteCRAI - Free Report) ), carrying a Zacks Rank #2 (Buy).

Avis Budget has an expected earnings growth rate of 420.6% for the current year. The company has a trailing four-quarter earnings surprise of 76.9%, on average.

Avis Budget’s shares have surged 744.3% in the past year. The company has a long-term earnings growth of 18.8%.

Cross Country Healthcare has an expected earnings growth rate of 447.8% for the current year. The company has a trailing four-quarter earnings surprise of 75%, on average.

Cross Country Healthcare’s shares have surged 201% in the past year. The company has a long-term earnings growth of 21.5%.

Charles River Associates has an expected earnings growth rate of 61.2% for the current year. The company has a trailing four-quarter earnings surprise of 51%, on average.

Charles River’s shares have surged 119.3% in the past year. The company has a long-term earnings growth of 15.5%.