| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 103.77 | -38 |
| Intrinsic value (DCF) | 582.06 | 247 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 45.11 | -73 |
Waste Connections, Inc. (NYSE: WCN) is a leading North American provider of non-hazardous waste collection, transfer, disposal, and resource recovery services, operating primarily in the U.S. and Canada. The company serves residential, commercial, municipal, industrial, and exploration & production (E&P) customers with a vertically integrated network of landfills, transfer stations, recycling facilities, and intermodal operations. Waste Connections differentiates itself through its focus on secondary and exclusive markets, reducing competition and enhancing pricing power. With a strong environmental stewardship focus, the company provides recycling services for materials like cardboard, plastics, and metals, alongside specialized E&P waste solutions for the oil and gas sector. As of 2021, it operated 334 collection sites, 61 MSW landfills, and 23 E&P liquid waste injection wells. Headquartered in Woodbridge, Canada, Waste Connections benefits from stable cash flows, regulatory advantages, and a disciplined acquisition strategy, positioning it as a key player in the waste management industry.
Waste Connections presents an attractive investment opportunity due to its defensive business model, strong free cash flow generation, and disciplined capital allocation. The company operates in a recession-resistant industry with high barriers to entry, benefiting from long-term contracts and pricing power in exclusive markets. Its focus on secondary markets reduces competition, while strategic acquisitions drive growth. However, risks include exposure to volatile E&P waste volumes, regulatory changes in landfill operations, and rising labor/fuel costs. With a market cap of ~$50.9B, a beta of 0.65 (indicating lower volatility than the market), and a dividend yield of ~0.5%, WCN appeals to investors seeking stable industrial sector exposure with moderate growth.
Waste Connections competes in the fragmented North American waste management industry by focusing on secondary and exclusive markets, avoiding direct competition with industry giants like Waste Management and Republic Services in major metropolitan areas. Its competitive advantages include: (1) Geographic differentiation – 80% of revenue comes from exclusive or duopoly markets; (2) Vertical integration – owning landfills creates pricing power for collection/transfer services; (3) Specialized E&P waste services – a high-margin niche with limited competitors; and (4) Acquisition expertise – 5-6% annual growth from tuck-in deals. The company maintains industry-leading margins (29.5% adjusted EBITDA margin in 2021) through route density optimization and automation. However, it faces scale disadvantages versus WM/RSG in recycling commodities pricing and national account bidding. Regulatory risks around landfill expansions and methane emissions could impact long-term capacity. Waste Connections' asset-light transfer station model provides flexibility but requires continuous acquisition fueling to maintain growth.