Valued at a market cap of $47.5 billion, Waste Connections (TSX:WCN) is a North American waste management company. It provides comprehensive non-hazardous waste services, including collection, transfer, disposal, and resource recovery across the United States and Canada, serving residential, commercial, municipal, industrial, and exploration & production (E&P) customers.
The company leverages four key competitive moats, which include the following:
- Economies of scale that spread costs across their large operational footprint while enabling technology investments.
- Network economies where an expanding customer base and geographic coverage increase service value.
- Counter-positioning by focusing on secondary and rural markets overlooked by larger competitors, and avoiding intense competition.
- Superior operational processes demonstrated through improved employee retention and safety performance.
This approach allows Waste Connections to achieve higher profitability in less competitive markets while building an integrated waste management network that’s difficult for competitors to replicate.
WCN stock went public in 2009 and has since returned 1,600% to shareholders, delivering market-beating returns. Let’s see if the TSX stock is still a good buy right now.
Is Waste Connections stock a buy, sell, or hold?
Waste Connections delivered another quarter of results exceeding guidance in Q2, showcasing the resilience of its solid waste franchise amid challenging macroeconomic conditions.
In the June quarter, it reported 32.7% adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margins, with underlying solid waste margins expanding 70 basis points, double the normalized rate.
This exceptional performance stems from improvements in employee retention, with voluntary turnover dropping below 11% for the first time, down nearly 60% from mid-2022 levels. Safety incidents declined 15% year over year, reinforcing the correlation between workforce stability and operational excellence.
Core solid waste pricing of 6.6% comfortably exceeded inflation, which indicates pricing power even in a sluggish economic environment. Management expects full-year pricing above 6%, with most increases already contractually secured. This pricing discipline, combined with volume trade-offs for profitability, underscores the company’s focus on quality revenue over market share.
Waste Connections has already completed $200 million in annualized acquisition revenue, with another $100-200 million under signed letters of intent for late 2025 or early 2026. The company’s strong balance sheet and $1.1 billion in liquidity provide flexibility for continued acquisitions while enabling opportunistic share repurchases totalling $240 million year to date.
Waste Connections maintained its 2025 revenue guidance of $9.45 billion with EBITDA margins of 33%. The recession-resistant company remains well-positioned to navigate economic uncertainty while delivering consistent value creation through operational excellence and strategic acquisitions.
What is the target price for the TSX stock?
Analysts tracking WCN stock forecast revenue to rise from $8.92 billion in 2024 to $12.8 billion in 2029. In this period, adjusted earnings are forecast to expand from $4.79 per share to $8.32 per share. Moreover, free cash flow is estimated to increase from $1.22 billion in 2024 to $2.20 billion in 2029.
Waste Connections is expected to pay shareholders an annual dividend of $1.29 per share in 2025. Given its outstanding share count, its annual dividend expense will range around $240 million, indicating a payout ratio of less than 20%. A widening cash flow base and a sustainable payout ratio will allow the TSX stock to increase annual dividends to $1.65 per share in 2028.
Bay Street remains bullish on WCN stock and expects it to gain 7% over the next 12 months, given consensus price targets.
