WCN: Future Returns Will Be Driven By Accretive M&A And Aggressive Buybacks

The analyst price target for Waste Connections has inched higher to approximately $205 from about $205 previously, as analysts highlight the company’s consistent outperformance, margin expansion potential, and long runway for value accretive M&A, despite near term sector headwinds.

Analyst Commentary

Bullish analysts generally frame Waste Connections as a high quality compounder, emphasizing its history of value accretive acquisitions and a long runway to continue consolidating fragmented secondary and rural markets. They see this M&A strategy, combined with exclusive and franchise contracts, as supporting durable growth and premium valuation multiples.

Recent research notes also highlight that, despite macro and sector headwinds, the company has repeatedly topped quarterly expectations and provided preliminary guidance that supports mid single digit to high single digit earnings growth. This execution track record is viewed as a key underpinning for upward price target revisions across the analyst community.

Bullish Takeaways

Bullish analysts argue that the company’s solid waste portfolio and exposure to exclusive contracts create high visibility into cash flows, justifying price targets that assume ongoing margin expansion through FY26.
Value accretive M&A and a differentiated focus on secondary and rural markets are seen as structural growth drivers that can support above sector revenue and EBITDA growth, even as parts of the industry face pricing pressure.
Improving employee retention, technology and infrastructure investments, and vertical integration are expected to structurally lift productivity and price retention, supporting sustained solid waste margin expansion and higher long term earnings power.
Several bullish analysts point to a free cash flow inflection, aided by moderating capex and ramping vertical integration benefits, as a catalyst for capital returns and higher valuation, reinforced by the recent large share buyback.

Bearish Takeaways

Bearish analysts caution that recycled cardboard price declines and softer specialty waste volumes weigh on roughly a mid teen percentage of the business, limiting near term pricing power and tempering upside to estimates.
Some models factor in slower contributions from new RNG projects, which could delay the pace of earnings growth in 2026 relative to the most optimistic scenarios, constraining multiple expansion in the near term.
While acknowledging strong Q3 execution, more cautious views emphasize that much of the positive solid waste performance is now reflected in the stock, with valuation near the upper end of sector ranges and dependent on continued flawless execution.
There remains sensitivity to commodity price cycles and regulatory or site specific issues, which, if they resurface more meaningfully, could pressure cash flow generation and lead to more measured price target adjustments.

What's in the News

Reaffirmed full year 2025 outlook, with the company stating it remains well positioned to deliver on guidance originally provided in July, and issued new fourth quarter 2025 revenue guidance of approximately $2.36 billion (Corporate Guidance).
Completed a share repurchase tranche between July 22, 2025 and September 30, 2025, buying back 569,660 shares, or about 0.22% of shares outstanding, for $103.3 million under the program announced July 24, 2025 (Buyback Tranche Update).
Completed a separate buyback tranche from July 1, 2025 to August 11, 2025, repurchasing 1,821,591 shares, or roughly 0.71% of shares outstanding, for $338.49 million under the program announced August 8, 2024 (Buyback Tranche Update).
Announced an 11.1% increase in the regular quarterly dividend, raising it from $0.315 to $0.35 per common share, payable November 20, 2025 to shareholders of record as of November 5, 2025 (Dividend Increases).

Valuation Changes

Fair Value: risen slightly to approximately $205.04 from about $204.96, reflecting a marginal upward revision in the intrinsic value estimate.
Discount Rate: fallen slightly to roughly 6.88% from about 6.89%, implying a modest reduction in perceived risk or required return.
Revenue Growth: edged higher to around 6.47% from approximately 6.47%, indicating a very small increase in long term growth expectations.
Net Profit Margin: eased slightly to roughly 13.76% from about 13.76%, suggesting a negligible downward adjustment to long term profitability assumptions.
Future P/E: risen marginally to about 40.13x from approximately 40.12x, signaling a virtually unchanged forward valuation multiple.

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.What are the underlying business or industry changes driving this perspective?

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 Earnings and 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.

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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.

Analysts Update Price Target as Waste Connections Announces Dividend Increase and Share Repurchases