In a recent update, Truist analyst Tobey Sommer has increased the price target for Waste Connections (WCN, Financial) from $210 to $220, while maintaining a Buy rating on the stock. This decision comes in light of the company's strong performance in the first quarter and its maintained guidance for 2025, which accounts for potential macroeconomic uncertainties.
Truist highlights the promising prospects for Waste Connections, notably in its margin expansion due to positive pricing strategies and cost management. Additionally, the company is expected to benefit from improving free cash flow conversion rates in the coming years. These factors contribute to an optimistic outlook for Waste Connections, supporting the raised price target.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 18 analysts, the average target price for Waste Connections Inc (WCN, Financial) is $212.54 with a high estimate of $227.00 and a low estimate of $197.00. The average target implies an upside of 8.04% from the current price of $196.72. More detailed estimate data can be found on the Waste Connections Inc (WCN) Forecast page.
Based on the consensus recommendation from 23 brokerage firms, Waste Connections Inc's (WCN, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Waste Connections Inc (WCN, Financial) in one year is $195.30, suggesting a downside of 0.72% from the current price of $196.72. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Waste Connections Inc (WCN) Summary page.
WCN Key Business Developments
Release Date: February 13, 2025
- Q4 2024 Revenue: $2.26 billion, up 11% year-over-year.
- Full Year 2024 Revenue: $8.92 billion, up 11.2% year-over-year.
- Q4 2024 Adjusted EBITDA: $732 million, 32.4% of revenue.
- Full Year 2024 Adjusted EBITDA: $2.902 billion, up 15% year-over-year, with a margin of 32.5%.
- Adjusted Free Cash Flow 2024: $1.218 billion, exceeding expectations.
- Acquisition Revenue Contribution 2024: $529 million for the full year.
- Core Pricing Q4 2024: 6.7%.
- Solid Waste Core Pricing 2024: 7.1%.
- Chiquita Canyon Landfill Closure Costs: $116.1 million write-down and $480.8 million in closure and post-closure liabilities.
- 2025 Revenue Outlook: $9.45 billion to $9.6 billion.
- 2025 Adjusted EBITDA Outlook: $3.12 billion to $3.2 billion, with a margin of 33% to 33.3%.
- 2025 Adjusted Free Cash Flow Outlook: $1.3 billion to $1.35 billion.
- Q1 2025 Revenue Outlook: $2.2 billion to $2.225 billion.
- Q1 2025 Adjusted EBITDA Outlook: $700 million to $710 million, 31.8% to 31.9% of revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Waste Connections Inc (WCN, Financial) achieved double-digit growth in both revenue and adjusted EBITDA for Q4 2024.
- The company successfully integrated acquisitions totaling approximately $750 million in annualized revenue in 2024.
- Employee turnover reached multiyear lows, improving operational execution and contributing to margin expansion.
- Price-led organic solid waste growth and improving commodities are expected to position the company at the high end of its financial outlook for 2025.
- The company has a robust acquisition pipeline, with over $75 million in annualized revenue already closed or signed for 2025.
Negative Points
- The closure of the Chiquita Canyon landfill resulted in significant financial impacts, including a $116.1 million write-down and $480.8 million in closure liabilities.
- Solid waste volumes in Q4 2024 were down 2.7%, reflecting a focus on quality of revenue and shedding unprofitable contracts.
- The company faces headwinds from declining commodity values, RINs, and FX rates, impacting margins.
- Incremental costs associated with the Chiquita Canyon ETLF event exceeded expectations, with significant outlays projected for 2025.
- Despite strong acquisition activity, the company anticipates continued volume declines due to strategic shedding and economic conditions.
