Why Waste Connections Stock Keeps Going Up

Waste Connections stock (TSX:WCN) continues to hit all-time highs. But is more on the way, or is an investment wasteful?

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Waste Connections (TSX:WCN) has proven time and again that it’s a stock you just can’t keep down. Shares of Waste Connections stock aren’t just at 52-week highs, but all-time highs. So, what gives?

Today, we’ll get into what’s made Waste Connections stock so strong. And why shares should continue going up.

What’s happening with Waste

Waste Connections stock has reached all-time highs recently for a number of reasons. The company has been active in mergers and acquisitions, which have expanded its market presence and service capabilities.

These strategic moves have allowed the company to capitalize on synergies and drive efficiency, contributing to its overall growth and profitability. This includes the acquisition of Lone Star Disposal, LP, a significant player in the waste management industry in Texas. It also includes Progressive Waste Solutions. This merger significantly boosted Waste Connections’ presence in Canada and the southern United States

Then there’s the business itself. Waste management is an essential service with steady demand, providing a stable revenue stream. The company’s ability to maintain high margins and continue operations even during economic downturns makes it an attractive investment.

What’s more, Waste Connections stock has focused on improving operational efficiency, which has enhanced its profitability. The company has invested in technology and streamlined its processes, resulting in better service delivery and cost management.

Recent earnings

The performance from Waste Connections stock also shows why investors have been quick to buy. Waste Connections stock reported strong earnings for the first quarter of 2024. The company achieved revenue of $2.1 billion, a 9.1% increase compared to the same period last year. 

Earnings per share (EPS) came in at $1.04, surpassing analyst expectations of $1.00. This solid performance was driven by the company’s strategic acquisitions, effective cost management, and increased market presence. The positive results have contributed to the stock reaching all-time highs and reflect Waste Connections’ robust financial health and growth potential.

Furthermore, the company holds a strong position in the waste management sector. Therefore, analysts believe there should be continued growth for the company. Especially from its increased market presence.

Still valuable?

All this information provides a great snapshot of what’s happened, but is Waste Connections stock still valuable? For that let’s look at the company’s metrics. The stock has demonstrated strong fundamentals, which have contributed to its stock reaching all-time highs. WCN currently holds a $60.2 billion market capitalization, reflecting a substantial size and market presence.

That being said, it holds a price-to-earnings (P/E) ratio of 58.1, indicating the stock is trading at a higher multiple relative to its past earnings. It also holds $7 billion in debt, for a debt-to-equity (D/E) ratio at 91.4%. This makes it a financially sound company.

Bottom line

While shares are up 24% in the last year, it’s down slightly from all-time highs. So, is it a buy? In short, Waste Connections stock certainly looks like a buy. Especially for long-term investors. Waste Connections has shown consistent revenue and earnings growth. For Q1 2024, the company reported revenues of $2.1 billion, a 9.1% year-over-year increase, and EPS of $1.04, exceeding analyst expectations.

Add the strategic acquisitions and positive market sentiment, as well as a 0.66% dividend yield and positive outlook, and it looks like a strong choice. However, potential investors should also consider some risks, such as the company’s high P/E ratio, which indicates that the stock is relatively expensive compared to its earnings. Additionally, fluctuations in commodity prices and regulatory changes in waste management policies could impact the company’s profitability. Even so, for long-term investors, an investment looks anything but wasteful.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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