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Waste Connections Hits 52-Week High on Solid Growth Drivers
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Shares of waste service company Waste Connections, Inc. (WCN - Free Report) hit a new 52-week high of $83.70 on Feb 17. It closed the trading session a notch lower at $83.60, for a healthy one-year return of 34.58%.
Waste Connections’ share price has been on a steady uptrend since Nov 2016. Owing to its strong price appreciation, this Zacks Rank #2 (Buy) stock still appears to have room for further upside. The stock currently has a long-term earnings growth expectation of 20.80%.
Growth Drivers
Waste Connections outperformed the Zacks categorized Waste Removal Services industry with an average return of 7.5% compared with 7% for the latter, over of the last three months. With prime location of disposal sites 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 offer a competitive advantage and serve as a barrier to entry. An experienced management team, decentralized operating strategy and financial strength remain additional tailwinds.
One of the most important profitability metrics is Return on Equity (ROE). ROE reveals how much profit a company earned compared with the total amount of shareholders’ equity found on the balance sheet. Waste Connections currently has a ROE of 12.10%, whereas the industry’s ROE is 7.61%. The favorable ROE acts as a growth driver for the company as investors would be eager to invest in it.
Waste Connections recently acquired Groot Industries for an undisclosed amount. The transaction is expected to augment the regional presence of the company and boost top-line growth with a complementary operating portfolio.The acquisition facilitates Waste Connections to better serve customers, while increasing potential internalization benefits of disposal volumes into its existing landfills and expanding scope to explore additional growth opportunities.
Also, Waste Connections and rival Progressive Waste Solutions Ltd merged in Jun 2016 to create an industry leader with enhanced scale and a stronger financial profile. With complementary footprint, the combined company has pro forma revenues of approximately $4.1 billion. It operates an integrated network of solid waste operations across North America.
Such a continued growth impetus and core focus perhaps boosted investors’ confidence and catapulted share prices to a new 52-week high.
Waste Management is currently trading at a forward P/E of 22.87x and has beaten estimates thrice over the trailing four quarters, for an average positive earnings surprise of 3.02%.
US Ecology has a long-term earnings growth expectation of 10% and is currently trading at a forward P/E of 27.43x.
Republic Services has a long-term earnings growth expectation of 9.06% and is currently trading at a forward P/E of 25.79x.
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Waste Connections Hits 52-Week High on Solid Growth Drivers
Shares of waste service company Waste Connections, Inc. (WCN - Free Report) hit a new 52-week high of $83.70 on Feb 17. It closed the trading session a notch lower at $83.60, for a healthy one-year return of 34.58%.
Waste Connections’ share price has been on a steady uptrend since Nov 2016. Owing to its strong price appreciation, this Zacks Rank #2 (Buy) stock still appears to have room for further upside. The stock currently has a long-term earnings growth expectation of 20.80%.
Growth Drivers
Waste Connections outperformed the Zacks categorized Waste Removal Services industry with an average return of 7.5% compared with 7% for the latter, over of the last three months. With prime location of disposal sites 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 offer a competitive advantage and serve as a barrier to entry. An experienced management team, decentralized operating strategy and financial strength remain additional tailwinds.
One of the most important profitability metrics is Return on Equity (ROE). ROE reveals how much profit a company earned compared with the total amount of shareholders’ equity found on the balance sheet. Waste Connections currently has a ROE of 12.10%, whereas the industry’s ROE is 7.61%. The favorable ROE acts as a growth driver for the company as investors would be eager to invest in it.
Waste Connections recently acquired Groot Industries for an undisclosed amount. The transaction is expected to augment the regional presence of the company and boost top-line growth with a complementary operating portfolio.The acquisition facilitates Waste Connections to better serve customers, while increasing potential internalization benefits of disposal volumes into its existing landfills and expanding scope to explore additional growth opportunities.
Also, Waste Connections and rival Progressive Waste Solutions Ltd merged in Jun 2016 to create an industry leader with enhanced scale and a stronger financial profile. With complementary footprint, the combined company has pro forma revenues of approximately $4.1 billion. It operates an integrated network of solid waste operations across North America.
Such a continued growth impetus and core focus perhaps boosted investors’ confidence and catapulted share prices to a new 52-week high.
Other Stocks to Consider
Some other favorably ranked stocks in the industry include Waste Management, Inc. (WM - Free Report) , US Ecology, Inc. and Republic Services, Inc. (RSG - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Waste Management is currently trading at a forward P/E of 22.87x and has beaten estimates thrice over the trailing four quarters, for an average positive earnings surprise of 3.02%.
US Ecology has a long-term earnings growth expectation of 10% and is currently trading at a forward P/E of 27.43x.
Republic Services has a long-term earnings growth expectation of 9.06% and is currently trading at a forward P/E of 25.79x.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>