Last Update 05 Nov 25
Fair value Decreased 0.68%WCN: Share Repurchases And Dividend Hike Will Drive Long-Term Margin Expansion
Waste Connections saw its average analyst price target edge up modestly by $0.42 to $207.00, as analysts cited continued outperformance versus expectations and optimism around long-term margin expansion and project execution, even though some forecasts for 2026 have been tempered.
Analyst Commentary
Analysts covering Waste Connections provided a range of perspectives following the latest financial results and guidance updates. Their commentaries highlight both opportunities ahead and reasons for measured optimism as well as factors prompting caution over the company’s long-term outlook.
Bullish Takeaways- Bullish analysts recognize Waste Connections’ ongoing trend of surpassing quarterly expectations, noting that operational execution remains robust despite a challenging macroeconomic backdrop.
- Margin expansion is seen as a key driver of future valuation upside, with improvements attributed to increased employee retention and strategic investments in technology and infrastructure that could bolster long-term price management and efficiency.
- The company’s large share buyback activity is viewed as a strong indicator of management’s confidence and ability to deploy capital to enhance shareholder returns.
- Long-term growth potential is underpinned by a differentiated business model, particularly its mix of exclusive and franchise contracts and a sizable footprint in secondary and rural markets. Analysts believe this supports continued success with merger and acquisition strategies.
- Bearish analysts are tempering 2026 expectations due to uncertainty in the timeline for contributions from new renewable natural gas projects, creating some risk to longer-term growth forecasts.
- Commodity markets and relative valuation remain near trough levels, prompting some caution around upside potential in the near term.
- While the company’s solid waste segment is performing well, there is limited near-term catalyst from other business lines, and results could be vulnerable to broader industry cyclicality and project delays.
What's in the News
- Issued new earnings guidance for the fourth quarter of fiscal year 2025 and projected approximately $2.36 billion in revenue, while reaffirming full-year 2025 guidance as previously provided in July (Key Developments).
- Completed a share repurchase of 569,660 shares, representing 0.22% of the company, for $103.3 million as part of the buyback announced in July 2025 (Key Developments).
- Finished another tranche of share repurchases by acquiring 1,821,591 shares, equal to 0.71% of the company, at a value of $338.49 million under the August 2024 buyback program (Key Developments).
- Announced an 11.1% increase in its quarterly dividend, raising the payout to $0.35 per share, to be distributed on November 20, 2025 (Key Developments).
Valuation Changes
- Fair Value: Decreased modestly from $206.77 to $205.36.
- Discount Rate: Declined slightly from 6.85% to 6.75%.
- Revenue Growth: Increased marginally from 6.52% to 6.65%.
- Net Profit Margin: Remained unchanged at 14.77%.
- Future P/E: Fell from 39.02x to 37.11x, indicating a lower future earnings multiple.
Key Takeaways
- Effective pricing and acquisition strategies, along with strong employee retention, position Waste Connections for robust revenue and margin growth.
- Enhanced safety performance and strategic recycling facility integration contribute to cost savings and expanded service capabilities, supporting future growth.
- Heavy reliance on acquisitions and volatile commodity-driven revenues pose risks to margins, while weather events and geopolitical factors add uncertainty to future earnings.
Catalysts
About Waste Connections- Provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada.
- Waste Connections’ pricing strategy has shown strong execution with a price-led organic solid waste growth, resulting in high visibility for full-year 2025 core pricing of at least 6%, which is expected to positively impact their revenue.
- The company’s reduction in voluntary turnover and improved employee retention for ten consecutive quarters indicate a healthier company environment, likely supporting operating efficiencies and margin expansion, thereby positively impacting net margins.
- Record safety performance and reduced incident rates are anticipated to unlock incremental cost savings in future periods, contributing to cost control and improved adjusted EBITDA margins.
- 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.
- The integration of a strategic state-of-the-art recycling facility in New Jersey is expected to complement their expanding New York City franchise, potentially enhancing service capabilities and driving revenue growth.
Waste Connections Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Waste Connections's revenue will grow by 7.1% annually over the next 3 years.
- Analysts assume that profit margins will increase from 7.0% today to 14.6% in 3 years time.
- Analysts expect earnings to reach $1.7 billion (and earnings per share of $6.62) by about September 2028, up from $643.8 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $1.4 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 39.7x on those 2028 earnings, down from 70.9x today. This future PE is greater than the current PE for the US Commercial Services industry at 25.7x.
- Analysts expect the number of shares outstanding to decline by 0.23% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.77%, as per the Simply Wall St company report.
Waste Connections Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The protracted weather events in many markets caused incremental volume weakness, indicating potential risks to future revenue and margins if severe weather becomes more frequent.
- Despite generally favorable conditions, the discussion of geopolitical factors such as tariffs suggests there could be unexpected capital or expense increases in the future, which may impact earnings.
- The company's growth strategy relies heavily on acquisitions, which could pressure net margins if integration challenges arise or if acquisition synergies do not materialize as expected.
- Concerns about potential changes in interest rates and financial market fluctuations indicate a risk to financing costs and capital expenditures, potentially affecting net income.
- Commodity-driven revenues remain volatile, with factors such as changes in OCC and RIN prices affecting financial results, which could lead to unpredictable impacts on revenue and margins.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $210.947 for Waste Connections based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $227.0, and the most bearish reporting a price target of just $150.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $11.3 billion, earnings will come to $1.7 billion, and it would be trading on a PE ratio of 39.7x, assuming you use a discount rate of 6.8%.
- Given the current share price of $177.61, the analyst price target of $210.95 is 15.8% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.