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Waste Connections (WCN) Stock Gains 23% in a Year: Here's Why

Waste Connections WCN had an impressive run over the past year. The stock has gained 23.2% compared with the 4.6% rally of the industry it belongs to and the 16.1% rise of the Zacks S&P 500 composite.

WCN has an expected long-term (three to five years) EPS growth rate of 12.9%. Its earnings for 2024 and 2025 are anticipated to increase 15.8% and 13.2%, respectively.

Waste Connections, Inc. Price and Consensus

 

Waste Connections, Inc. price-consensus-chart | Waste Connections, Inc. Quote

Reasons for the Upside

Waste Connections’ earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 2.1%.

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The company has an early mover advantage in E&P waste treatment and disposal in certain rural basins, which play a key role in improving market positioning and generating higher financial returns. The company aims at increasing market penetration and offering additional services to capitalize on future drilling opportunities in those areas. Waste Connections also targets leveraging its franchise-based platforms to expand its customer base beyond the exclusive market territories.

WCN’s operations are managed in a decentralized manner to place decision-making authority close to customers. It enables WCN to identify and address the needs of customers on a real-time basis in a cost-efficient manner. It expands into geographically contiguous markets, capitalizing on the low overhead and highly efficient operational structure. Also, it enables Waste Connections to operate in relatively small communities that other competitors may not find appealing.

Waste Connections has been active on the acquisition front. In 2023, 2022 and 2021, WCN completed 13, 24 and 30 acquisitions, respectively. These acquisitions significantly contributed $410.9 million in 2023, $552 million in 2022 and $215.39 million in 2021 to the top line. The notable acquisitions made by Waste Connections include American Disposal Services, Groot Industries and Progressive Waste.

WCN pays out consistent dividends to its shareholders. In 2023, 2022 and 2021, Waste Connections paid out $270.6 million, $243 million and $220.2 million in dividends, respectively. Such moves hint at the company’s commitment to create value for shareholders, thereby boosting its confidence in its business.

Zacks Rank & Stocks to Consider

WCN currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Booz Paysafe Limited PSFE and TransUnion TRU.

Paysafe Limited carries a Zacks Rank #2 (Buy) at present. It has a long-term earnings growth expectation of 18.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PSFE delivered a trailing four-quarter earnings surprise of 18.3%, on average.

TransUnion is currently a Zacks #2 Ranked stock. It has a long-term earnings growth expectation of 14.6%.

TRU delivered a trailing four-quarter earnings surprise of 6.4% on average.

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Waste Connections, Inc. (WCN) : Free Stock Analysis Report

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