Yahoo Finance Waste Connections (WCN) Down 0.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Waste Connections (WCN). Shares have lost about 0.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Waste Connections due for a breakout? 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 Q1 Earnings
Waste Connections, Inc. reported solid first-quarter 2024 results, wherein earnings and revenues surpassed the Zacks Consensus Estimates.
Waste Connections’ adjusted earnings (excluding 15 cents from non-recurring items) of $1 per share beat the Zacks Consensus Estimate by 2% and increased 16.9% year over year. Revenues of $2.1 billion surpassed the consensus estimate by 1% and rose 9.1% from the year-ago quarter.
Segmental Revenues
The Solid Waste Collection segment’s revenues increased 5.6% year over year to $1.5 billion and met our estimate. The Solid Waste Disposal and Transfer segment’s revenues increased 6.2% from the year-ago quarter to $655.4 million and surpassed our estimate of $404.9 million.
The Solid Waste Recycling segment’s revenues increased 56.6% year over year to $49 million. The figure beat our estimate of $36.8 million. The Intermodal and Other segment’s revenues grew 29.6% from the year-ago quarter to $49.5 million, which surpassed our estimate of $33.2 million.
The E&P Waste Treatment, Recovery and Disposal segment’s revenues soared 88.2% from the year-ago quarter to $97.4 million, topping our estimate of $56.8 million.
Operating Results
Adjusted EBITDA in the reported quarter was $566.9 million, down 12.9% from the year-ago quarter. The adjusted EBITDA margin was 29.8%, which declined 160 basis points from the year-ago quarter.
Operating income totaled $314.7 million, lower than the year-ago figure of $366.8 million. The operating margin was 16.6%, down from 17.7% reported a year ago.
Balance Sheet and Cash Flow
Waste Connections exited first-quarter 2024 with cash and cash equivalents of $78.4 million compared with $78.6 million at the end of the preceding quarter. The long-term debt was $6.7 billion compared with $6.9 billion at the end of the previous quarter.
WCN generated $442.4 million in cash from operating activities in the reported quarter. The adjusted free cash flow was $274 million. Capital expenditure totaled $175.8 million. The company paid out $65.8 million worth of dividends in the quarter.
Q2 Outlook
For second-quarter 2024, revenues are estimated to be $2.200-$2.225 billion. Net income is expected to be $263-$268 million and the adjusted EBITDA is estimated to be $715-$723 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Waste Connections has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Waste Connections has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Waste Connections, Inc. (WCN) : Free Stock Analysis Report
