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Why Waste Connections Inc. Rose Nearly 2% on Wednesday

Waste Connections Inc. (NYSE:WCN)(TSX:WCN), one of the largest integrated solid waste services companies in Canada and the United States, announced better-than-expected second-quarter earnings results and raised its full-year outlook after the market closed on Tuesday, and its stock responded by rising 1.9% in Wednesday’s trading session. Let’s take a closer look at the results and the fundamentals of its stock to determine if we should be long-term buyers today, or if we should wait for a better entry point in the trading sessions ahead.

A very strong quarter of double-digit percentage growth

Here’s a quick breakdown of 10 of the most notable statistics from Waste Connections’s three-month period ended on June 30, 2017, compared with the same period in 2016:

Metric Q2 2017 Q2 2016 Change
Solid waste collection revenue US$794.74 million US$501.17 million 58.6%
Solid waste disposal and transfer revenue US$257.24 million US$160.03 million 60.7%
Solid waste recycling revenue US$41.34 million US$16.73 million 147.2%
E&P waste treatment, recovery, & disposal revenue US$47.17 million US$27.48 million 71.7%
Intermodal & other revenues US$35.08 million US$22.23 million 57.8%
Total revenue US$1,175.57 million US$727.64 million 61.6%
Adjusted net income US$145.46 million US$93.21 million 56.1%
Adjusted net income per share US$0.55 US$0.44 25%
Operating cash flow US$551.91 million US$259.65 million 112.6%
Adjusted free cash flow US$156.13 million US$120.68 million 29.4%

Raising its outlook on 2017

In its earnings release, Waste Connections also raised its full-year outlook on fiscal 2017. The company now expects the following:

Metric New outlook Previous outlook
Revenue US$4.57 billion US$4.45 billion
Adjusted EBITDA US$1.45 billion US$1.41 billion
Adjusted free cash flow US$750 million US$725 million

What should you do with Waste Connections now?

It was a phenomenal quarter overall for Waste Connections, driven by its acquisition of Progressive Waste in June 2016 as well as price and volume growth. The results also surpassed the consensus estimates of analysts polled by Thomson Reuters, which called for adjusted earnings per share of US$0.53 on revenue of US$1.15 billion. With all of this being said, I think the market reacted correctly by sending its stock higher in Wednesday’s trading session, and I think it could continue higher from here because investors will continue to pay up for its incredible growth rate and its estimated 14.5% long-term growth rate.

I think Waste Connections would make a great addition to any Foolish portfolio, so take a closer look and consider adding it to yours today.

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Fool contributor Joseph Solitro has no position in any stocks mentioned.

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