Waste Connections (TSX:WCN) is down 10% in the last month, whats going on?

Waste Connections Inc. (WCN): A Declining Stock with Strong Fundamentals
Waste Connections Inc. (WCN), headquartered in Woodbridge, Canada, is a leading provider of non-hazardous waste collection, transfer, and disposal services across the United States and Canada. With a comprehensive range of solutions for residential, commercial, and industrial customers, the company has built a robust reputation in the waste management industry.
Despite its strong operational performance, the stock has recently seen a decline in price, prompting questions about the factors influencing its performance.
Key Offerings by Waste Connections Inc.
Waste Collection Services:
- Provides tailored collection solutions for residential, commercial, municipal, and industrial customers.
Landfill Operations:
- Operates a vast network of landfills offering disposal services for various waste streams.
Recycling Initiatives:
- Specializes in the recycling of compost, cardboard, mixed paper, plastic containers, glass, and metals.
E&P Waste Management:
- Offers treatment, recovery, and disposal services for waste generated from oil and natural gas exploration.
Intermodal Services:
- Facilitates efficient rail haul movement of solid waste containers through intermodal facilities.
Waste Connections Inc. (WCN) Stock Performance Analysis
The stock price of Waste Connections Inc. has seen a decline recently, raising concerns among investors. Despite strong fundamentals, external market pressures and operational challenges have contributed to this trend.
Factors Contributing to the Decline
- Market-Wide Volatility:
- The broader market has experienced bearish sentiment, which has negatively impacted WCN’s stock performance.
- Inflationary Pressures:
- Rising operational costs due to inflation have squeezed profit margins, a key concern for investors.
- Interest Rate Environment:
- With central banks raising interest rates, dividend-paying stocks like WCN have become less attractive to income-focused investors.
- Profit-Taking:
- After a strong rally earlier in the year, some investors have cashed out their gains, further pressuring the stock.
- Acquisition-Related Costs:
- While recent acquisitions are expected to drive long-term growth, the short-term impact of integration costs and initial expenses has weighed on earnings.
Code | Name | GicSector | Beta | 52WeekHigh | 52WeekLow | 50DayMA | 200DayMA | SharesShort | SharesShortPriorMonth | ShortRatio | ShortPercent |
---|---|---|---|---|---|---|---|---|---|---|---|
WCN | Waste Connections Inc | Industrials | 0.72 | 273.51 | 203.72 | 257.83 | 244.15 | 881,581 | 1,247,617 | 2.79 | 0.0039 |
Recent Developments and Long-Term Potential
Growth Through Acquisitions
Waste Connections has continued its strategy of expanding through acquisitions, most recently adding multiple solid waste service providers in both Canada and the United States. These acquisitions are expected to enhance revenue growth and market penetration in key regions.
Dividend Payouts
The company’s commitment to shareholder value is evident in its consistent dividend payouts, currently yielding 1.5%. This reflects strong cash flow generation despite market challenges.
Analyst Sentiment
While analysts remain mixed, many highlight the company’s undervaluation relative to its peers, coupled with its resilient revenue model. Long-term investors may see the current dip as a buying opportunity.
Valuation Metrics
Valuation Measure | Current | 2024-09-30 | 2024-06-30 | 2024-03-31 | 2023-12-31 | 2023-09-30 |
---|---|---|---|---|---|---|
Market Cap | 64.05B | 62.33B | 61.97B | 60.08B | 50.89B | 46.68B |
Enterprise Value | 76.14B | 73.06B | 72.91B | 69.48B | 60.17B | 55.93B |
Trailing P/E | 46.84 | 53.73 | 57.07 | 58.10 | 46.58 | 41.59 |
Forward P/E | 22.17 | 24.21 | 26.81 | 26.32 | 22.88 | 20.62 |
PEG Ratio (5yr expected) | — | — | — | — | — | — |
Price/Sales | 5.07 | 5.49 | 5.52 | 5.52 | 4.91 | 4.55 |
Price/Book | 5.32 | 5.78 | 5.80 | 5.75 | 5.08 | 4.67 |
Enterprise Value/Revenue | 6.06 | 6.42 | 6.50 | 6.40 | 5.79 | 5.40 |
Enterprise Value/EBITDA | 20.16 | 22.04 | 22.87 | 22.69 | 19.46 | 18.11 |
The table above highlights key valuation metrics for Waste Connections Inc., demonstrating steady growth in market cap and enterprise value over recent quarters. The trailing and forward P/E ratios reflect improved profitability expectations, while Price/Sales and Price/Book ratios indicate consistent investor confidence in the company’s valuation.
Peer Comparison
Code | Name | GIC Sector | Market Cap | Beta | 52 Week High | 52 Week Low | 50 Day MA | 200 Day MA | Shares Short | Short Ratio | Short Percent |
---|---|---|---|---|---|---|---|---|---|---|---|
TRI | Thomson Reuters Corp | Industrials | $105.44B | 0.394 | 243.42 | 189.31 | 232.52 | 226.85 | 1,067,796 | 3.27 | 0.008 |
CP | Canadian Pacific Railway Ltd | Industrials | $102.12B | 0.789 | 122.76 | 101.46 | 106.47 | 110.75 | 3,304,475 | 2.10 | 0.0035 |
CNR | Canadian National Railway Co | Industrials | $93.40B | 0.648 | 178.49 | 143.72 | 151.63 | 161.64 | 2,453,851 | 1.72 | 0.0098 |
WCN | Waste Connections Inc | Industrials | $63.75B | 0.72 | 273.51 | 195.26 | 256.69 | 242.97 | 855,848 | 3.39 | 0.0037 |
WSP | WSP Global Inc | Industrials | $33.19B | 0.824 | 259.21 | 181.26 | 248.53 | 227.83 | 672,028 | 2.62 | 0.0042 |
GFL | Gfl Environmental Holdings Inc | Industrials | $25.29B | 1.032 | 68.43 | 41.88 | 62.91 | 54.05 | 2,132,087 | 8.39 | 0.0116 |
RBA | Ritchie Bros Auctioneers | Industrials | $24.15B | 0.917 | 139.19 | 81.35 | 130.14 | 112.80 | 552,517 | 2.64 | 0.0034 |
TFII | TFI International Inc | Industrials | $16.50B | 1.375 | 219.49 | 171.80 | 202.91 | 198.58 | 393,696 | 5.69 | 0.0074 |
STN | Stantec Inc | Industrials | $13.04B | 0.817 | 123.69 | 103.09 | 116.80 | 113.56 | 796,384 | 3.19 | 0.0083 |
EFN | Element Fleet Management Corp | Industrials | $11.84B | 0.914 | 30.35 | 20.92 | 29.04 | 26.22 | 3,386,758 | 6.64 | 0.022 |
This table provides a comparative overview of key peers within the industrials sector, showcasing their market cap, beta, moving averages, and short interest data. Waste Connections Inc. (WCN) demonstrates strong market positioning among its competitors, supported by solid financials and operational performance.
TL;DR Summary
Stock Decline: Waste Connections Inc. (WCN) has seen a recent drop in its stock price despite strong fundamentals.
Key Factors: Inflation, market volatility, and acquisition costs have impacted performance.
Long-Term Potential: Robust acquisition strategy and strong dividend payouts support long-term growth opportunities.
This analysis highlights the balance between Waste Connections’ near-term challenges and its long-term growth potential.