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Waste Connections, Inc. (WCN) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Waste Connections (WCN - Free Report) ? Shares have been on the move with the stock up 7.1% over the past month. The stock hit a new 52-week high of $181.39 in the previous session. Waste Connections has gained 20.9% since the start of the year compared to the 8.4% move for the Zacks Business Services sector and the 18.8% return for the Zacks Waste Removal Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 24, 2024, Waste Connections reported EPS of $1.04 versus consensus estimate of $1.02.
For the current fiscal year, Waste Connections is expected to post earnings of $4.85 per share on $8.8 billion in revenues. This represents a 15.75% change in EPS on a 9.72% change in revenues. For the next fiscal year, the company is expected to earn $5.51 per share on $9.41 billion in revenues. This represents a year-over-year change of 13.64% and 6.92%, respectively.
Valuation Metrics
Waste Connections may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Waste Connections has a Value Score of C. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 37.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 28.1X. On a trailing cash flow basis, the stock currently trades at 22.3X versus its peer group's average of 11.2X. Additionally, the stock has a PEG ratio of 2.88. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Waste Connections currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Waste Connections passes the test. Thus, it seems as though Waste Connections shares could still be poised for more gains ahead.
How Does WCN Stack Up to the Competition?
Shares of WCN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Enviri Corporation (NVRI - Free Report) . NVRI has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Enviri Corporation beat our consensus estimate by 66.67%, and for the current fiscal year, NVRI is expected to post earnings of $0.07 per share on revenue of $2.43 billion.
Shares of Enviri Corporation have gained 17.8% over the past month, and currently trade at a forward P/E of 135.43X and a P/CF of 4.68X.
The Waste Removal Services industry is in the top 43% of all the industries we have in our universe, so it looks like there are some nice tailwinds for WCN and NVRI, even beyond their own solid fundamental situation.
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Waste Connections, Inc. (WCN) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Waste Connections (WCN - Free Report) ? Shares have been on the move with the stock up 7.1% over the past month. The stock hit a new 52-week high of $181.39 in the previous session. Waste Connections has gained 20.9% since the start of the year compared to the 8.4% move for the Zacks Business Services sector and the 18.8% return for the Zacks Waste Removal Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 24, 2024, Waste Connections reported EPS of $1.04 versus consensus estimate of $1.02.
For the current fiscal year, Waste Connections is expected to post earnings of $4.85 per share on $8.8 billion in revenues. This represents a 15.75% change in EPS on a 9.72% change in revenues. For the next fiscal year, the company is expected to earn $5.51 per share on $9.41 billion in revenues. This represents a year-over-year change of 13.64% and 6.92%, respectively.
Valuation Metrics
Waste Connections may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Waste Connections has a Value Score of C. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 37.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 28.1X. On a trailing cash flow basis, the stock currently trades at 22.3X versus its peer group's average of 11.2X. Additionally, the stock has a PEG ratio of 2.88. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Waste Connections currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Waste Connections passes the test. Thus, it seems as though Waste Connections shares could still be poised for more gains ahead.
How Does WCN Stack Up to the Competition?
Shares of WCN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Enviri Corporation (NVRI - Free Report) . NVRI has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Enviri Corporation beat our consensus estimate by 66.67%, and for the current fiscal year, NVRI is expected to post earnings of $0.07 per share on revenue of $2.43 billion.
Shares of Enviri Corporation have gained 17.8% over the past month, and currently trade at a forward P/E of 135.43X and a P/CF of 4.68X.
The Waste Removal Services industry is in the top 43% of all the industries we have in our universe, so it looks like there are some nice tailwinds for WCN and NVRI, even beyond their own solid fundamental situation.