Ongoing geopolitical tensions and uncertainty surrounding disruptions linked to the artificial intelligence boom have heightened volatility in Canadian equity markets. Despite this, the S&P/TSX Composite Index has gained more than 31% over the past 12 months and currently sits just 0.9% below its all-time high.
In contrast, Waste Connections (TSX:WCN) has underperformed the broader market, declining by more than 16% during the same period and trading 21.7% below its 52-week high. Lower recycled commodity prices, reduced renewable energy credits tied to landfill gas sales, softer solid waste volumes, and limited progress in reopening the Chiquita Canyon landfill, which was shut down at the end of 2024, appear to have dampened investor sentiment, dragging the solid waste management company’s stock price down.
Following this recent pullback, let’s examine the company’s fourth-quarter results, growth outlook, and valuation to determine whether the current weakness presents an attractive buying opportunity.
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WCN’s fourth-quarter performance
WCN reported fourth-quarter revenue of US$2.37 billion, up 5% year over year. Contributions from acquisitions completed over the past four quarters, along with favourable pricing of 6.4%, more than offset weaker volumes and lower commodity prices, supporting overall revenue growth. In 2025, the company completed 19 acquisitions, adding US$58 million to fourth-quarter revenue. However, total volumes declined 2.7% due to intentional shedding, price-volume trade-offs, and continued softness in the more cyclical segments of the business.
Backed by top-line growth and solid execution, WCN generated adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of US$796 million, representing an 8.7% increase from the prior year. Its adjusted EBITDA margin expanded 110 basis points to 33.5%, exceeding management’s guidance. Improvements in employee turnover — which reached a three-year low — and a reduction in safety incidents contributed to cost savings, productivity gains, and enhanced customer service, supporting margin expansion.
Additionally, adjusted earnings per share (EPS) came in at US$1.29, up 11.2% from the same quarter last year. With its fourth-quarter performance in perspective, let’s now turn to the company’s growth prospects.
WCN’s growth prospects
WCN appears well-positioned for long-term growth as it continues to prioritize both organic expansion and strategic acquisitions. The company is steadily building out its renewable natural gas (RNG) portfolio, with five facilities currently in operation and several additional facilities expected to come online by the end of this year. Management also anticipates bringing a new state-of-the-art recycling facility into service next year. Backed by a strong balance sheet and a healthy financial position, WCN intends to maintain an active acquisition strategy to strengthen its footprint.
In addition to these expansion initiatives, the company is investing in AI-driven solutions to enhance efficiency and productivity. By further digitizing and automating operations and leveraging advanced data analytics to improve forecasting, WCN aims to optimize performance. Its dynamic routing platform is helping improve asset utilization, while better employee engagement and safety metrics have reduced voluntary turnover and enhanced customer satisfaction and retention. Collectively, these efforts should help lower operating costs and support margin expansion.
Looking ahead, management expects 2026 revenue in the range of US$9.90–US$9.95 billion, with the midpoint implying 4.8% year-over-year growth. Adjusted EBITDA could increase by more than 6%, while adjusted free cash flow could reach US$1.4–US$1.45 billion, with the midpoint reflecting a 13.2% increase from the prior year. Overall, the company’s growth outlook remains solid.
Investors’ takeaway
Following the recent pullback, WCN now trades at more reasonable valuation levels, with its next-12-month price-to-sales and price-to-earnings multiples at 4.2 and 29.7, respectively.
The company has also consistently rewarded shareholders through dividend growth and share repurchases. Last year alone, it returned $830 million to investors via dividends and buybacks, underscoring its strong cash flow generation and shareholder-friendly capital allocation strategy.
Considering its solid long-term growth prospects, disciplined acquisition strategy, expanding renewable energy footprint, and commitment to returning capital, I believe WCN could be an attractive buy for long-term investors, despite potential near-term volatility.
