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Waste Connections (WCN) Gains From Its Acquisition Strategy
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Waste Connections (WCN - Free Report) has been benefiting from a solid acquisition strategy and shareholder-friendly policies while focusing on operational efficiency. The company is troubled by low liquidity and seasonality.
WCN has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
The shares of WCN have gained 7% in the year-to-date period as compared with Waste Removal Services industry’s 8.3% increase and S&P 500 composite’s 17.1% increase.
Waste Connections actively pursues acquisitions as part of its strategic approach, considering financial, market, and management criteria. The company uses initial acquisitions as a foundation to bolster its presence, offering a broader range of services, expanding the customer base, and strategically pursuing additional "tuck-in" acquisitions in either new or adjacent markets. In 2022, 2021 and 2020, Waste Connections successfully completed 24, 30, and 21 acquisitions, respectively. These acquisitions significantly contributed to its revenues, with amounts of $552 million in 2022, $215.39 million in 2021 and $197.23 million in 2020. The notable acquisitions made by Waste Connections include American Disposal Services, Groot Industries and Progressive Waste.
Waste Connections demonstrates a steadfast commitment to rewarding its shareholders by consistently paying dividends and engaging in share repurchases. In 2022, 2021, and 2020, the company paid dividends totaling $243 million, $220.2 million, and $199.9 million, respectively. Additionally, it displayed confidence in the business by repurchasing shares valued at $425 million in 2022, $339 million in 2021, and $105.7 million in 2020. These actions underscore the company's dedication to creating shareholder value and the belief in the strength and future prospects of the business.
Waste Connections primarily concentrates on delivering comprehensive waste management services, encompassing the entire process from waste collection to disposal in landfills it either owns or manages. The company adopts a decentralized operational approach, empowering local decision-making close to the customers. This approach enables it to promptly identify and respond to customer requirements in a cost-effective manner. By maintaining a lean and highly efficient operational structure, Waste Connections can effectively extend its presence into neighboring geographic markets and efficiently serve smaller communities that may not be as appealing to other competitors.
Some Worrying Features
Waste Connections' current ratio (a measure of liquidity) at the end of second-quarter 2023 was 0.76, lower than the current ratio of 0.94 reported at the end of the prior-year quarter. Decreasing current ratio is not desirable as it indicates that the company may have problems meeting its short-term debt obligations.
Waste Connections experiences significant seasonality in its revenue patterns. The first quarter typically records the lowest revenues. Subsequently, there is an increase in revenues during the second and third quarters. However, in the fourth quarter, revenues tend to dip compared with the preceding two quarters.
WCN carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the Business Service sector, which may be considered by investors:
Verisk Analytics (VRSK - Free Report) beat the Zacks Consensus Estimate in three of the four previous quarters and matched on one instance, with an average surprise of 9.9% The consensus mark for 2023 revenues is pegged at $2.66 billion, which reflects a decrease of 8.2% from the year-ago figure. Earnings are pegged at $5.71 per share for 2023, which is 14% above the year-ago figure. VRSK currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Automatic Data (ADP - Free Report) currently has a Zacks Rank of 2. The company beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 3.1%. The consensus estimate for fiscal 2023 revenues and earnings implies growth of 6.3% and 11.1%, respectively.
Broadridge (BR - Free Report) currently carries a Zacks Rank of 2. It beat the Zacks Consensus Estimate in two of the trailing four quarters, missed once and matched on one instance, the average surprise being 0.5%. The Zacks Consensus Estimate for fiscal 2024 revenues and earnings calls for a rise of 7.2% and 8.8%, respectively.
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Waste Connections (WCN) Gains From Its Acquisition Strategy
Waste Connections (WCN - Free Report) has been benefiting from a solid acquisition strategy and shareholder-friendly policies while focusing on operational efficiency. The company is troubled by low liquidity and seasonality.
WCN has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
The shares of WCN have gained 7% in the year-to-date period as compared with Waste Removal Services industry’s 8.3% increase and S&P 500 composite’s 17.1% increase.
Waste Connections, Inc. Price
Waste Connections, Inc. price | Waste Connections, Inc. Quote
Factors That Augur Well
Waste Connections actively pursues acquisitions as part of its strategic approach, considering financial, market, and management criteria. The company uses initial acquisitions as a foundation to bolster its presence, offering a broader range of services, expanding the customer base, and strategically pursuing additional "tuck-in" acquisitions in either new or adjacent markets. In 2022, 2021 and 2020, Waste Connections successfully completed 24, 30, and 21 acquisitions, respectively. These acquisitions significantly contributed to its revenues, with amounts of $552 million in 2022, $215.39 million in 2021 and $197.23 million in 2020. The notable acquisitions made by Waste Connections include American Disposal Services, Groot Industries and Progressive Waste.
Waste Connections demonstrates a steadfast commitment to rewarding its shareholders by consistently paying dividends and engaging in share repurchases. In 2022, 2021, and 2020, the company paid dividends totaling $243 million, $220.2 million, and $199.9 million, respectively. Additionally, it displayed confidence in the business by repurchasing shares valued at $425 million in 2022, $339 million in 2021, and $105.7 million in 2020. These actions underscore the company's dedication to creating shareholder value and the belief in the strength and future prospects of the business.
Waste Connections primarily concentrates on delivering comprehensive waste management services, encompassing the entire process from waste collection to disposal in landfills it either owns or manages. The company adopts a decentralized operational approach, empowering local decision-making close to the customers. This approach enables it to promptly identify and respond to customer requirements in a cost-effective manner. By maintaining a lean and highly efficient operational structure, Waste Connections can effectively extend its presence into neighboring geographic markets and efficiently serve smaller communities that may not be as appealing to other competitors.
Some Worrying Features
Waste Connections' current ratio (a measure of liquidity) at the end of second-quarter 2023 was 0.76, lower than the current ratio of 0.94 reported at the end of the prior-year quarter. Decreasing current ratio is not desirable as it indicates that the company may have problems meeting its short-term debt obligations.
Waste Connections experiences significant seasonality in its revenue patterns. The first quarter typically records the lowest revenues. Subsequently, there is an increase in revenues during the second and third quarters. However, in the fourth quarter, revenues tend to dip compared with the preceding two quarters.
WCN carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the Business Service sector, which may be considered by investors:
Verisk Analytics (VRSK - Free Report) beat the Zacks Consensus Estimate in three of the four previous quarters and matched on one instance, with an average surprise of 9.9% The consensus mark for 2023 revenues is pegged at $2.66 billion, which reflects a decrease of 8.2% from the year-ago figure. Earnings are pegged at $5.71 per share for 2023, which is 14% above the year-ago figure. VRSK currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Automatic Data (ADP - Free Report) currently has a Zacks Rank of 2. The company beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 3.1%. The consensus estimate for fiscal 2023 revenues and earnings implies growth of 6.3% and 11.1%, respectively.
Broadridge (BR - Free Report) currently carries a Zacks Rank of 2. It beat the Zacks Consensus Estimate in two of the trailing four quarters, missed once and matched on one instance, the average surprise being 0.5%. The Zacks Consensus Estimate for fiscal 2024 revenues and earnings calls for a rise of 7.2% and 8.8%, respectively.