WASTE CONNECTIONS INC (WCN) Stock Fundamental Analysis
NYSE:WCN - New York Stock Exchange, Inc. - CA94106B1013 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to WCN. WCN was compared to 83 industry peers in the Commercial Services & Supplies industry. WCN has an excellent profitability rating, but there are concerns on its financial health. WCN is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
WCN had positive earnings in the past year.
WCN had a positive operating cash flow in the past year.
WCN had positive earnings in each of the past 5 years.
WCN had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
WCN has a better Return On Assets (3.11%) than 60.24% of its industry peers.
WCN has a Return On Equity of 7.85%. This is in the better half of the industry: WCN outperforms 62.65% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.47%, WCN is in the better half of the industry, outperforming 61.45% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for WCN is below the industry average of 11.67%.
The 3 year average ROIC (7.10%) for WCN is below the current ROIC(7.47%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.11% | ||
| ROE | 7.85% | ||
| ROIC | 7.47% |
ROA(3y)4.08%
ROA(5y)3.58%
ROE(3y)9.84%
ROE(5y)8.27%
ROIC(3y)7.1%
ROIC(5y)6.62%
1.3 Margins
WCN has a better Profit Margin (6.93%) than 73.49% of its industry peers.
In the last couple of years the Profit Margin of WCN has declined.
The Operating Margin of WCN (19.16%) is better than 87.95% of its industry peers.
WCN's Operating Margin has improved in the last couple of years.
The Gross Margin of WCN (42.02%) is better than 72.29% of its industry peers.
WCN's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.16% | ||
| PM (TTM) | 6.93% | ||
| GM | 42.02% |
OM growth 3Y2.81%
OM growth 5Y2.48%
PM growth 3Y-11.67%
PM growth 5Y-8.02%
GM growth 3Y0.97%
GM growth 5Y0.56%
2. Health
2.1 Basic Checks
WCN has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for WCN remains at a similar level compared to 1 year ago.
WCN has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, WCN has a worse debt to assets ratio.
2.2 Solvency
WCN has an Altman-Z score of 3.51. This indicates that WCN is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 3.51, WCN is doing good in the industry, outperforming 69.88% of the companies in the same industry.
WCN has a debt to FCF ratio of 7.11. This is a slightly negative value and a sign of low solvency as WCN would need 7.11 years to pay back of all of its debts.
WCN has a better Debt to FCF ratio (7.11) than 63.86% of its industry peers.
WCN has a Debt/Equity ratio of 1.05. This is a high value indicating a heavy dependency on external financing.
WCN has a Debt to Equity ratio of 1.05. This is in the lower half of the industry: WCN underperforms 66.27% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.05 | ||
| Debt/FCF | 7.11 | ||
| Altman-Z | 3.51 |
ROIC/WACC0.9
WACC8.3%
2.3 Liquidity
A Current Ratio of 0.70 indicates that WCN may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.70, WCN is doing worse than 87.95% of the companies in the same industry.
WCN has a Quick Ratio of 0.70. This is a bad value and indicates that WCN is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.70, WCN is doing worse than 86.75% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.7 | ||
| Quick Ratio | 0.7 |
3. Growth
3.1 Past
WCN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.44%, which is quite good.
WCN shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 11.90% yearly.
The Revenue has grown by 10.75% in the past year. This is quite good.
Measured over the past years, WCN shows a quite strong growth in Revenue. The Revenue has been growing by 10.60% on average per year.
EPS 1Y (TTM)12.44%
EPS 3Y14.04%
EPS 5Y11.9%
EPS Q2Q%8.65%
Revenue 1Y (TTM)10.75%
Revenue growth 3Y13.19%
Revenue growth 5Y10.6%
Sales Q2Q%7.5%
3.2 Future
The Earnings Per Share is expected to grow by 12.25% on average over the next years. This is quite good.
WCN is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.92% yearly.
EPS Next Y11.3%
EPS Next 2Y12.86%
EPS Next 3Y13.78%
EPS Next 5Y12.25%
Revenue Next Year7.12%
Revenue Next 2Y7.11%
Revenue Next 3Y7.63%
Revenue Next 5Y7.92%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 40.23, which means the current valuation is very expensive for WCN.
WCN's Price/Earnings ratio is in line with the industry average.
WCN's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 26.29.
Based on the Price/Forward Earnings ratio of 32.17, the valuation of WCN can be described as expensive.
The rest of the industry has a similar Price/Forward Earnings ratio as WCN.
WCN is valuated rather expensively when we compare the Price/Forward Earnings ratio to 22.17, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 40.23 | ||
| Fwd PE | 32.17 |
4.2 Price Multiples
WCN's Enterprise Value to EBITDA is on the same level as the industry average.
WCN's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 42.92 | ||
| EV/EBITDA | 20.21 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of WCN may justify a higher PE ratio.
WCN's earnings are expected to grow with 13.78% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.56
PEG (5Y)3.38
EPS Next 2Y12.86%
EPS Next 3Y13.78%
5. Dividend
5.1 Amount
WCN has a yearly dividend return of 0.68%, which is pretty low.
WCN's Dividend Yield is a higher than the industry average which is at 2.52.
With a Dividend Yield of 0.68, WCN pays less dividend than the S&P500 average, which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.68% |
5.2 History
On average, the dividend of WCN grows each year by 12.03%, which is quite nice.
WCN has paid a dividend for at least 10 years, which is a reliable track record.
WCN has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)12.03%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
WCN pays out 49.31% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of WCN is growing around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP49.31%
EPS Next 2Y12.86%
EPS Next 3Y13.78%
196.31
-0.78 (-0.4%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryCommercial Services & Supplies
Earnings (Last)
Earnings (Next)
Inst Owners89.98%
Inst Owner Change0.84%
Ins Owners0.14%
Ins Owner Change2.38%
Market Cap50.72B
Analysts75.29
Price Target206.32 (5.1%)
Short Float %0.58%
Short Ratio1.19
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.68% |
Yearly Dividend1.17
Dividend Growth(5Y)12.03%
DP49.31%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-1.64%
Min EPS beat(2)-5.03%
Max EPS beat(2)1.76%
EPS beat(4)3
Avg EPS beat(4)1.02%
Min EPS beat(4)-5.03%
Max EPS beat(4)4.9%
EPS beat(8)6
Avg EPS beat(8)1.14%
EPS beat(12)9
Avg EPS beat(12)1.6%
EPS beat(16)12
Avg EPS beat(16)1.57%
Revenue beat(2)0
Avg Revenue beat(2)-0.5%
Min Revenue beat(2)-0.75%
Max Revenue beat(2)-0.25%
Revenue beat(4)2
Avg Revenue beat(4)0.06%
Min Revenue beat(4)-0.75%
Max Revenue beat(4)0.84%
Revenue beat(8)2
Avg Revenue beat(8)-0.24%
Revenue beat(12)4
Avg Revenue beat(12)-0.23%
Revenue beat(16)8
Avg Revenue beat(16)0.15%
PT rev (1m)40.07%
PT rev (3m)49.85%
EPS NQ rev (1m)-1.13%
EPS NQ rev (3m)-4.47%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.49%
Revenue NQ rev (1m)-0.16%
Revenue NQ rev (3m)0.12%
Revenue NY rev (1m)0.11%
Revenue NY rev (3m)-0.2%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 40.23 | ||
| Fwd PE | 32.17 | ||
| P/S | 5.59 | ||
| P/FCF | 42.92 | ||
| P/OCF | 22.24 | ||
| P/B | 6.33 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.21 |
EPS(TTM)4.88
EY2.49%
EPS(NY)6.1
Fwd EY3.11%
FCF(TTM)4.57
FCFY2.33%
OCF(TTM)8.83
OCFY4.5%
SpS35.13
BVpS31.02
TBVpS-8.16
PEG (NY)3.56
PEG (5Y)3.38
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.11% | ||
| ROE | 7.85% | ||
| ROCE | 9.43% | ||
| ROIC | 7.47% | ||
| ROICexc | 7.52% | ||
| ROICexgc | 16.81% | ||
| OM | 19.16% | ||
| PM (TTM) | 6.93% | ||
| GM | 42.02% | ||
| FCFM | 13.02% |
ROA(3y)4.08%
ROA(5y)3.58%
ROE(3y)9.84%
ROE(5y)8.27%
ROIC(3y)7.1%
ROIC(5y)6.62%
ROICexc(3y)7.13%
ROICexc(5y)6.71%
ROICexgc(3y)16.04%
ROICexgc(5y)15.16%
ROCE(3y)8.97%
ROCE(5y)8.36%
ROICexcg growth 3Y4.71%
ROICexcg growth 5Y6.27%
ROICexc growth 3Y5.49%
ROICexc growth 5Y5.39%
OM growth 3Y2.81%
OM growth 5Y2.48%
PM growth 3Y-11.67%
PM growth 5Y-8.02%
GM growth 3Y0.97%
GM growth 5Y0.56%
F-Score5
Asset Turnover0.45
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.05 | ||
| Debt/FCF | 7.11 | ||
| Debt/EBITDA | 2.86 | ||
| Cap/Depr | 92.25% | ||
| Cap/Sales | 12.1% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 77.85% | ||
| Profit Quality | 187.86% | ||
| Current Ratio | 0.7 | ||
| Quick Ratio | 0.7 | ||
| Altman-Z | 3.51 |
F-Score5
WACC8.3%
ROIC/WACC0.9
Cap/Depr(3y)94.39%
Cap/Depr(5y)92.61%
Cap/Sales(3y)12.05%
Cap/Sales(5y)12.09%
Profit Quality(3y)159.7%
Profit Quality(5y)199.37%
High Growth Momentum
Growth
EPS 1Y (TTM)12.44%
EPS 3Y14.04%
EPS 5Y11.9%
EPS Q2Q%8.65%
EPS Next Y11.3%
EPS Next 2Y12.86%
EPS Next 3Y13.78%
EPS Next 5Y12.25%
Revenue 1Y (TTM)10.75%
Revenue growth 3Y13.19%
Revenue growth 5Y10.6%
Sales Q2Q%7.5%
Revenue Next Year7.12%
Revenue Next 2Y7.11%
Revenue Next 3Y7.63%
Revenue Next 5Y7.92%
EBIT growth 1Y12.58%
EBIT growth 3Y16.36%
EBIT growth 5Y13.35%
EBIT Next Year80.4%
EBIT Next 3Y29.5%
EBIT Next 5Y20.05%
FCF growth 1Y8.63%
FCF growth 3Y7.13%
FCF growth 5Y6.05%
OCF growth 1Y12.66%
OCF growth 3Y9.49%
OCF growth 5Y7.67%