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Waste Connections (WCN) Up 2.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Waste Connections (WCN - Free Report) . Shares have added about 2.5% 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 the most recent earnings report in order to get a better handle on the important drivers.
Waste Connections Beats on Q2 Earnings,
Waste Connections reported solid second-quarter 2022 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings (excluding 13 cents from non-recurring items) of $1.00 per share beat the Zacks Consensus Estimate by 5.3% and increased 23.5% year over year. Revenues of $1.82 billion topped the consensus mark by 0.9% and rose 18.4% year over year.
Acquisitions contributed $44.1 million to revenues in the reported quarter.
Revenues by Segment
The Solid Waste Collection segment’s revenues increased 18.1% year over year to $1.3 billion.
The Solid Waste Disposal and Transfer segment’s revenues increased 10.5% from the year-ago quarter’s level to $601.2 million.
The Solid Waste Recycling segment’s revenues surged 62.7% year over year to $67.5 million.
The Intermodal and Other segment’s revenues increased 19.9% to $46.3 million.
The E&P Waste Treatment, Recovery and Disposal segment’s revenues soared 56.6% from the year-ago quarter’s level to $54.2 million.
Operating Results
Adjusted EBITDA in the reported quarter was $566.8 million, up 16.9% from the year-ago quarter’s level. Adjusted EBITDA margin came in at 31.2% compared with 31.6% in the year-ago quarter.
Operating income totaled $329.6 million, up 23.5% from the prior-year quarter’s level.
Balance Sheet and Cash Flow
Waste Connections exited second-quarter 2022 with cash and cash equivalents of $217.8 million compared with $391.42 million at the end of the prior quarter. Long-term debt was $5.82 billion compared with $5.63 billion at the end of the March quarter.
WCN generated $532.8 million of cash from operating activities in the reported quarter. Adjusted free cash flow was $318 million. Capital expenditures totaled $219.11 million.
WCN paid out dividends worth $59.4 million in the reported quarter.
2022 View
Revenues are estimated to be $7.125 billion (previous view: $6.875 billion).
Net income is estimated to be $837.5 million. Adjusted EBITDA is estimated to be $2.190 billion (past view: $2.145 billion).
Capital expenditures are estimated to be approximately $850 million, in line with the previous estimate.
Net cash provided by operating activities is estimated to be $1.974 billion. Adjusted free cash flow is estimated to be $1.160 billion (past view: $1.150 billion).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Waste Connections has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Waste Connections has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Waste Connections is part of the Zacks Waste Removal Services industry. Over the past month, Waste Management (WM - Free Report) , a stock from the same industry, has gained 1.7%. The company reported its results for the quarter ended June 2022 more than a month ago.
Waste Management reported revenues of $5.03 billion in the last reported quarter, representing a year-over-year change of +12.3%. EPS of $1.44 for the same period compares with $1.27 a year ago.
Waste Management is expected to post earnings of $1.50 per share for the current quarter, representing a year-over-year change of +19.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Waste Management has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Waste Connections (WCN) Up 2.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Waste Connections (WCN - Free Report) . Shares have added about 2.5% 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 the most recent earnings report in order to get a better handle on the important drivers.
Waste Connections Beats on Q2 Earnings,
Waste Connections reported solid second-quarter 2022 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings (excluding 13 cents from non-recurring items) of $1.00 per share beat the Zacks Consensus Estimate by 5.3% and increased 23.5% year over year. Revenues of $1.82 billion topped the consensus mark by 0.9% and rose 18.4% year over year.
Acquisitions contributed $44.1 million to revenues in the reported quarter.
Revenues by Segment
The Solid Waste Collection segment’s revenues increased 18.1% year over year to $1.3 billion.
The Solid Waste Disposal and Transfer segment’s revenues increased 10.5% from the year-ago quarter’s level to $601.2 million.
The Solid Waste Recycling segment’s revenues surged 62.7% year over year to $67.5 million.
The Intermodal and Other segment’s revenues increased 19.9% to $46.3 million.
The E&P Waste Treatment, Recovery and Disposal segment’s revenues soared 56.6% from the year-ago quarter’s level to $54.2 million.
Operating Results
Adjusted EBITDA in the reported quarter was $566.8 million, up 16.9% from the year-ago quarter’s level. Adjusted EBITDA margin came in at 31.2% compared with 31.6% in the year-ago quarter.
Operating income totaled $329.6 million, up 23.5% from the prior-year quarter’s level.
Balance Sheet and Cash Flow
Waste Connections exited second-quarter 2022 with cash and cash equivalents of $217.8 million compared with $391.42 million at the end of the prior quarter. Long-term debt was $5.82 billion compared with $5.63 billion at the end of the March quarter.
WCN generated $532.8 million of cash from operating activities in the reported quarter. Adjusted free cash flow was $318 million. Capital expenditures totaled $219.11 million.
WCN paid out dividends worth $59.4 million in the reported quarter.
2022 View
Revenues are estimated to be $7.125 billion (previous view: $6.875 billion).
Net income is estimated to be $837.5 million. Adjusted EBITDA is estimated to be $2.190 billion (past view: $2.145 billion).
Capital expenditures are estimated to be approximately $850 million, in line with the previous estimate.
Net cash provided by operating activities is estimated to be $1.974 billion. Adjusted free cash flow is estimated to be $1.160 billion (past view: $1.150 billion).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Waste Connections has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Waste Connections has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Waste Connections is part of the Zacks Waste Removal Services industry. Over the past month, Waste Management (WM - Free Report) , a stock from the same industry, has gained 1.7%. The company reported its results for the quarter ended June 2022 more than a month ago.
Waste Management reported revenues of $5.03 billion in the last reported quarter, representing a year-over-year change of +12.3%. EPS of $1.44 for the same period compares with $1.27 a year ago.
Waste Management is expected to post earnings of $1.50 per share for the current quarter, representing a year-over-year change of +19.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Waste Management has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.