Waste Connections (TSX:WCN) earnings are set to be released, and investors are likely keeping an eye on the stock after estimate-beating performance during the last two quarters. But, of course, the big question will be whether the company can keep it up.
To understand what to watch for then, let’s take a dive into the company. Considering earnings, growth, and value, this will help us understand what investors can look for upon first-quarter earnings from WCN stock.
About WCN stock
First off, let’s discuss a bit about what WCN stock does. Waste Connections offers a range of waste management services, including residential, commercial, and industrial waste collection. They also provide recycling services and operate transfer stations and landfills for waste disposal.
The stock has experienced significant growth since its inception through both organic expansion and acquisitions. The company has acquired numerous smaller waste management firms to expand its footprint in various regions.
This has come from actively pursued acquisitions, adding approximately $640 million of annualized revenue in 2022 alone, and this continued in 2023. So, let’s look at the last few quarters to see how the company has performed and whether it can keep it up.
Earnings momentum
If we turn our attention to the last few quarters, we can hopefully paint a picture of where the company is seeing positive or negative momentum. Starting with the second quarter, WCN stock reported revenue of $2.021 billion, above its outlook, with net income of $209.2 million. The stock added $160 million in revenue from acquisitions as well. It also updated its full-year 2023 outlook from the results, with net income to hit $931 million and revenue of about $8.025 billion.
For the third quarter, revenue improved further to $2.065 billion, with net income at $229 million. By the fourth quarter, revenue actually dropped back a bit to $2.036 billion, with net income down as well to $126.8 million. What’s more, the company went on to miss full-year guidance, achieving revenue of $8.022 billion and net income of just $762.8 million.
That being said, the company was excited about 2024. After completing acquisitions with about $215 million of total annualized revenue for 2023, more growth should come in 2024. Revenue from acquisitions should contribute 4%, with even more expected in 2024. Plus, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) should grow by 13%.
What to watch
It’s pretty clear then that what we need to watch is how the company keeps up with these numbers. If WCN stock hopes to achieve $8.75 billion in revenue for 2024, as outlined, that will mean the first quarter needs to achieve around $2.1875 billion in revenue. Net income is hoped to hit $1.096 billion, needing
$274 million per quarter. So, based on its guidance, investors will need to pay particular attention to whether the stock can keep up.
So, while WCN stock certainly saw improvements during the last year and saw an increase in year-over-year revenue, there continues to be more growth needed — especially if it hopes to keep up with its own goals.
