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Why Is Waste Connections (WCN) Down 0.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Waste Connections (WCN - Free Report) . Shares have lost about 0.2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Waste Connections due for a breakout? 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 drivers.

Waste Connections Beats on Q4 Earnings, 

Waste Connections reported solid fourth-quarter 2022 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate.

Adjusted earnings (excluding 14 cents from non-recurring items) of 89 cents per share beat the Zacks Consensus Estimate by 1.1% and increased 7.2% year over year. Revenues of $1.87 billion topped the Zacks Consensus Estimate by 1.1% and rose 15.1% year over year.

Acquisitions contributed $79.4 million to revenues in the reported quarter.

Revenues by Segment

The Solid Waste Collection segment’s revenues increased 71.8% year over year to $1.16 billion.

The Solid Waste Disposal and Transfer segment’s revenues increased 19.5% from the year-ago quarter’s level to $533.1 million.

The Solid Waste Recycling segment’s revenues surged 4.3% year over year to $75.3 million.

The Intermodal and Other segment’s revenues increased 2.3% to $39.6 million in a years time.

The E&P Waste Treatment, Recovery and Disposal segment’s revenues soared 2.1% from the year-ago quarter’s level to $37.6 million.

Operating Results

Adjusted EBITDA in the reported quarter was $563.6 million, up 13.8% from the year-ago quarter’s level. Adjusted EBITDA margin came in at 30.5% compared with 30.2% in the year-ago quarter.

Operating income totaled $312 million, up 25.2% from the prior-year quarter’s level.

Balance Sheet and Cash Flow

Waste Connections exited fourth-quarter 2022 with cash and cash equivalents of $78.6 million compared with $147.4 million at the end of the prior quarter. Long-term debt was $6.89 billion compared with $6.2 billion at the end of the September quarter.

WCN generated $522.4 million of cash from operating activities in the reported quarter. Adjusted free cash flow was $235.84 million. Capital expenditures totaled $294.4 million.

WCN paid out dividends worth $65.3 million in the reported quarter.

2023 View

Revenues are estimated to be $8.050 billion. 

Net income is expected to be $961 million. Adjusted EBITDA is estimated to be $2.5 billion.

Capital expenditures are projected to be approximately $925 million.

Net cash provided by operating activities is anticipated to be $2.12 billion.

Adjusted free cash flow is estimated to be $1.225 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

Currently, Waste Connections has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been 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.


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