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Waste Connections (WCN) Stock Up 26% in a Year: Here's Why

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Shares of Waste Connections, Inc. (WCN - Free Report) have gained 26% over the past year against 15.7% decline of the industry it belongs to.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s delve deeper into factors that have contributed to the company’s outperformance.

Consecutive Earnings & Revenue Beat

Waste Connections came up with better-than-expected earnings and revenue performance in the past four quarters. The company’s bottom line continued to benefit from improvements in operational efficiency. Contributions from acquisitions and strength across all segments boosted the top line.

Strategic Acquisitions Bode Well

Waste Connections has been active on the acquisition front. The company follows a strategic combination of financial, market and management criteria to evaluate opportunities from acquisitions. In new 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 that market or adjacent markets. During 2021, 2020 and 2019, the company completed 30, 21 and 21 acquisitions, respectively. Acquisitions contributed $215.39 million, $197.23 million and $291.93 million to revenues in 2021, 2020 and 2019, respectively.

Shareholder-Friendly Moves

Waste Connections has been consistent in rewarding its shareholders. In 2021, Waste Connections paid $220.2 million in dividend and repurchased shares worth $339 million. In 2020, Waste Connections paid $199.9 million in dividend and repurchased shares worth $105.7 million. In 2019, the company paid $175.1 million in dividend but did not repurchase any shares. Such moves indicate the company’s commitment to create value for shareholders and underline its confidence in its business. These initiatives not only instill investors’ confidence but also positively impact the company’s earnings per share.

Zacks Rank and Stocks to Consider

Waste Connections 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 better-ranked stocks in the broader Business Services sector that investors may consider are Cross Country Healthcare (CCRN - Free Report) , NV5 Global (NVEE - Free Report) and Clean Harbors (CLH - Free Report) , each sporting a Zacks Rank #1.

Cross Country Healthcare has a trailing four-quarter earnings surprise of 41.5%, on average.

Cross Country Healthcare’s shares have surged 59.3% in the past year. The company has a long-term earnings growth of 6.5%.

NV5 Global has an expected earnings growth rate of 6.1% for the current year. It delivered a trailing four-quarter earnings surprise of 22.2%, on average.

NV5 Global’s shares have surged 42% in the past year. The company has a long-term earnings growth of 14.2%.

Clean Harbors has an expected earnings growth rate of 17% for the current year. The company has a trailing four-quarter earnings surprise of 43.2%, on average.

Clean Harbors’ shares have surged 23.5% in the past year.

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