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Waste Connections Inc. Message Board

  • watchthedownside watchthedownside Apr 2, 2009 11:00 AM Flag

    2.5x EV/Revenue for WCN vs. 1.7x for RSG/WMI

    ...makes absolutely no sense....all three companies will have over 8x debt/free cash flow next year...potential growth differences are a non-event in that all three companies will be leverage constrained....also, all three companies only earn their respective costs of capital (7.5% area) - so how can they be valued at more than their capital base (as WCN is now?)

    Therefore to value WCN based on public comparables yields a $15/share value, and to value it based on its capital base is $23/share....that is a good valuation range for this stock

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    • Not sure I see your point...three different companies same industry....republic just obtained revenues(your denominator) in an all stock deal with allied...Waste Mgt is huge mature company....WCN is growing itself into new markets and just made huge purchases of assets that still are yet to be integrated fully and thus are not operating at maximum potential .

      Why would you think all of your ratios should be the same

      The management of WCN is amazing !! they have grown to a major player in the industry since its 1997 inception and are on target to grow revenues to 3Bil

      The market determines EV(market cap+-debt/cash)..

      If you are looking at these items as an investor...and they don't meet your criteria dont invest in WCN...I think they have better growth characteristics and think that mgt continues to do amazing things with this company.

      I suggest you go pay premium prices for apple ...given your criteria

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