A Look At Waste Connections (WCN) Valuation After Recent Share Price Weakness

What Waste Connections stock’s recent slide means for investors

Waste Connections (WCN) has drawn attention after its stock declined about 9% over the past month and roughly 13% over the past 3 months, prompting investors to reassess expectations.

See our latest analysis for Waste Connections.

At a share price of $149.02, Waste Connections is down 14.42% on a year to date share price basis and its 1 year total shareholder return has declined 23.77%, even though the 5 year total shareholder return of 27.35% shows that longer term holders have experienced gains.

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With revenue and net income both growing on an annual basis and the stock trading about 37% below one set of analyst and intrinsic value estimates, you have to ask: is this a reset buying opportunity, or is the market already factoring in future growth?

Most Popular Narrative: 25.2% Undervalued

Compared with the last close at $149.02, the most followed narrative pegs Waste Connections' fair value at $199.16, creating a sizable valuation gap for investors to weigh.

Robust acquisition activity, with annualized revenues closed already over $125 million, and a strong balance sheet position Waste Connections well for continued growth and successful integration of acquisitions, supporting future revenue and earnings growth.

Read the complete narrative.

Want to see what sits behind that growth story and valuation gap? Pricing, margins and earnings power all carry specific assumptions that materially shift the fair value outcome.

Result: Fair Value of $199.16 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you still need to watch acquisition execution and commodity exposed revenue, as missteps in these areas could pressure margins and challenge that undervaluation narrative.

Find out about the key risks to this Waste Connections narrative.

Another View: What The P/E Ratio Is Telling You

That 25.2% gap to fair value is based on future cash flows, but the current P/E of 35.9x tells a different story. It sits well above the US Commercial Services industry at 21.9x, peers at 30.7x, and even the fair ratio of 27.2x. This points to meaningful valuation risk if sentiment cools.

For a closer look at how this earnings based yardstick stacks up against industry norms and the fair ratio the market could move toward, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment clearly mixed, this is a moment to move quickly, review the underlying figures yourself, and weigh 4 key rewards and 1 important warning sign

Looking for more investment ideas?

If Waste Connections is on your radar, do not stop there. The screener can surface other possibilities worth your attention before the market moves on.

• Tap into potential mispricing by scanning for other quality companies trading below intrinsic estimates with the 46 high quality undervalued stocks.
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• Reduce portfolio stress by hunting for companies that score well on balance sheet resilience and fundamentals using the solid balance sheet and fundamentals stocks screener (46 results).

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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