Back to top

Image: Bigstock

Reasons to Retain Waste Connections (WCN) in Your Portfolio Now

Read MoreHide Full Article

Waste Connections, Inc. (WCN - Free Report) 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 company has an expected long-term earnings per share (three to five years) growth rate of 11%. Earnings are expected to register year-over-year growth of 9.4% in 2023 and 14.8% in 2024.

Factors That Augur Well

Being a leading player in the waste management industry, Waste Connections will likely benefit from ongoing trends such as increasing environmental concerns, rapid industrialization, increase in population and active government measures to reduce illegal dumping.

With the prime location of disposal sites being within competitive markets, Waste Connections has optimal asset positioning to generate higher profitability. Given the importance of and costs associated with the transportation of waste to treatment and disposal sites, having disposal capacity proximate to the waste stream offers a competitive advantage and serves as a barrier to entry.

Waste Connections has a steady dividend, as well as a share repurchase policy. In 2021 and 2020, the company repurchased shares worth $339 million and $105.7 million, respectively. It paid $220.2 million, $199.9 million and $175.1 million in dividends during 2021, 2020 and 2019, respectively. Such moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business.

Some Risks

Waste Connections' current ratio (a measure of liquidity) at the end of second-quarter 2023 was pegged at 0.76, lower than the prior quarter’s 0.82 and the year-ago quarter’s 0.94. A decline in the current ratio is not desirable as it indicates that the company may have problems meeting its short-term debt obligations.

Zacks Rank & Stocks to Consider

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

The following better-ranked stocks from the Business Services sector are worth consideration:

Verisk Analytics (VRSK - Free Report) beat the Zacks Consensus Estimate in three of the last four 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, suggesting a decrease of 8.2% from the year-ago figure. The consensus estimate for 2023 earnings is pegged at $5.71 per share, indicating a 14% rise from the year-ago figure. VRSK currently carries 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. It outpaced 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 8.4% and 11.1%, respectively.

Broadridge (BR - Free Report) currently carries a Zacks Rank of 2. It surpassed 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 consensus estimate for fiscal 2024 revenues and earnings suggests growth of 9.3% and 8.8%, respectively.

Published in