Investing in undervalued stocks with strong underlying fundamentals will allow you to consistently generate inflation-beating returns over time. However, it’s essential to identify quality companies that are part of expanding addressable markets, which allows them to grow revenue and earnings consistently.
One such TSX stock is Waste Connections (TSX:WCN). Valued at a market cap of US$43 billion, Waste Connections provides non-hazardous waste collection, transfer, disposal, and recycling services across the United States and Canada. It serves residential, commercial, municipal, and industrial customers, operates landfills and transfer stations, and offers specialized waste treatment for oil and gas exploration.
The TSX stock has returned more than 500% to shareholders over the past decade, in dividend-adjusted gains. Despite these outsized returns, WCN stock is down almost 17% from its all-time highs, giving you a chance to buy the dip.
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Is this TSX stock a good buy right now?
Waste Connections delivered third-quarter results that exceeded expectations, which showcases the durability of its solid waste business model amid ongoing economic headwinds.
The company reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margins of 33.8%, reflecting underlying solid waste margin expansion of approximately 80 basis points even as it navigated incremental commodity pressures.
Revenue grew 5.1% year over year to US$2.46 billion, driven by strong pricing execution of 6.3% in core solid waste services. Management raised its full-year pricing guidance to approximately 6.5%, up from its initial expectations of 6%, citing improved retention driven by new data analytics tools.
Volumes declined 2.7% during the quarter, similar to second-quarter trends, primarily reflecting deliberate shedding of low-margin contracts and continued weakness in construction-related activity.
Waste Connections deployed new artificial intelligence and data analytics platforms that are already showing compelling results. The pricing optimization tool, rolled out to roughly one-seventh of company locations, has achieved 30% to 40% reductions in customer churn while maintaining similar price increases.
Management expects to expand this technology to half or three-quarters of operations throughout 2026, positioning the company for continued margin gains.
Acquisition activity remained robust, with approximately US$300 million in annualized revenue either closed or under a definitive agreement year-to-date. Notable wins included two of Florida’s largest private waste companies, demonstrating the company’s ability to execute strategic consolidation in attractive markets.
Looking ahead to 2026, management provided preliminary guidance for mid-single-digit revenue growth, driven by price-led organic growth and roughly 1% from acquisition carryover.
What is the WCN stock price target?
Analysts tracking the TSX stock forecast revenue to increase from US$8.92 billion in 2024 to US$12.63 billion in 2029. In this period, adjusted earnings are projected to expand from US$4.79 per share to US$8.24 per share. Further, its free cash flow is expected to improve from US$1.22 billion in 2024 to US$2.26 billion in 2029.
Waste Connections has increased its annual dividend per share from US$0.41 in 2016 to US$1.17 in 2024. This payout is expected to increase to US$1.29 this year and to US$2.43 in 2029.
Recently, the company board authorized an 11.1% dividend increase, marking the 15th consecutive year of double-digit growth since initiating the dividend in 2010. With an annual dividend expense of roughly US$330 million, WCN’s payout ratio is less than 30%, which is quite sustainable.
In October 2025, WCN stock trades at 30 times forward FCF, which is lower than its five-year average of 32.4 times. If the stock is priced at 27 times forward FCF, it could return close to 40% within the next three years. Given consensus estimates, the TSX dividend stock trades at a 22% discount in October 2025.
