Yahoo Finance Waste Connections (WCN) Up 3.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Waste Connections (WCN). Shares have added about 3.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Waste Connections due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Waste Connections Beats on Q3 Earnings,
Waste Connections reported solid third-quarter 2022 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings (excluding 18 cents from non-recurring items) of $1.10 per share beat the Zacks Consensus Estimate by 8.9% and increased 23.6% year over year. Revenues of $1.88 billion topped the consensus mark by 0.3% and rose 17.7% year over year. Acquisitions contributed $51.4 million to revenues in the reported quarter.
Revenues by Segment
The Solid Waste Collection segment’s revenues increased 20.2% year over year to $1.34 billion. The Solid Waste Disposal and Transfer segment’s revenues increased 11.4% from the year-ago quarter’s level to $616.9 million. The Solid Waste Recycling segment’s revenues plunged 13.5% year over year to $48.25. The Intermodal and Other segment’s revenues increased 24.6% to $47.6 million. The E&P Waste Treatment, Recovery and Disposal segment’s revenues soared 48.1% from the year-ago quarter’s level to $57 million.
Operating Results
Adjusted EBITDA in the reported quarter was $588.1 million, up 16.3% from the year-ago quarter’s level. Adjusted EBITDA margin came in at 31.3% compared with 31.7% in the year-ago quarter. Operating income totaled $326.8 million, up 14.6% from the prior-year quarter’s level.
Dividend Hike
WCN announced that its board of directors declared a dividend hike of 10.9% to 25.5 cents per share. The updated dividend will be paid out on Dec 1 to its shareholders of record as of Nov 16.
Balance Sheet and Cash Flow
Waste Connections exited third-quarter 2022 with cash and cash equivalents of $147.4 million compared with $217.8 million at the end of the prior quarter. Long-term debt was $6.2 billion compared with $5.63 billion at the end of the March quarter.
WCN generated $421.5 million of cash from operating activities in the reported quarter. Adjusted free cash flow was $240 million. Capital expenditures totaled $208.1 million. WCN paid out dividends worth $53.5 million in the reported quarter. Currently, Waste Connections carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Updated 2022 View
Full-year revenues are estimated at $7.190 billion (previous view: $7.125 billion). Net income is estimated to be $836.7 million (prior view: $837.5 million). Adjusted EBITDA is estimated at $2.210 billion (past view: $2.190 billion).
Capital expenditures are estimated to be approximately $850 million, in line with the previous estimate. Net cash provided by operating activities is estimated to be $1.963 billion (prior view: $1.974 billion). Adjusted free cash flow is estimated to be $1.160 billion, in line with the previous estimate.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Waste Connections has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Waste Connections has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Waste Connections belongs to the Zacks Waste Removal Services industry. Another stock from the same industry, Waste Management (WM), has gained 6.8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Waste Management reported revenues of $5.08 billion in the last reported quarter, representing a year-over-year change of +8.8%. EPS of $1.56 for the same period compares with $1.26 a year ago.
Waste Management is expected to post earnings of $1.42 per share for the current quarter, representing a year-over-year change of +12.7%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Waste Management has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Waste Connections, Inc. (WCN) : Free Stock Analysis Report
Waste Management, Inc. (WM) : Free Stock Analysis Report
