A month has gone by since the last earnings report for Waste Connections (WCN). Shares have added about 2.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Waste Connections due for a pullback? 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 catalysts.
Waste Connections Surpasses Q1 Earnings & Revenues Estimates
Waste Connections reported better-than-expected first-quarter 2021 results.
Adjusted earnings (excluding 9 cents from non-recurring items) of 70 cents per share beat the Zacks Consensus Estimate by 4.5% and increased 7.7% year over year. Revenues of $1.39 billion beat the consensus mark by 1.5% and rose 3.2% year over year.
Acquisitions contributed $40.5 million to revenues in the reported quarter.
Revenues by Segment
Solid Waste Collection segment revenues increased 4.8% year over year to $1.03 billion. The segment contributed 74% to total revenues.
Solid Waste Disposal and Transfer segment revenues increased 4.2% from the year-ago quarter’s level to $270.8 million. The segment contributed 19.4% to total revenues.
Intermodal and Other segment revenues increased 18.7% to $35.6 million. The segment contributed 2.5% to total revenues.
Solid Waste Recycling segment revenues surged 79.2% year over year to $31.45 million. The segment contributed 2.25% to total revenues.
E&P Waste Treatment, Recovery and Disposal segment revenues declined 58.4% from the year-ago quarter’s level to $24.66 million. The segment contributed 1.8% to total revenues.
Adjusted EBITDA in the reported quarter was $433.2 million, up 6% from the year-ago quarter’s levels. Adjusted EBITDA margin came in at 31% compared with 30.2% in the year-ago quarter.
Operating income totaled $238.4 million, up 9.8% from the year-ago quarter’s figures. Operating income margin came in at 17.1% compared with 16% in the year-ago quarter.
Balance Sheet and Cash Flow
Waste Connections exited first-quarter 2021 with cash and cash equivalents of $743.46 million compared with $617.29 million at the end of the prior quarter. Long-term debt was $4.61 billion compared with $4.71 billion at the end of the prior quarter.
The company generated $400.4 million of cash from operating activities in the reported quarter. Adjusted free cash flow was $289.8 million. Capital expenditures totaled $96.79 million.
The company paid out dividend of $53.9 million in the reported quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
Currently, Waste Connections has a nice Growth Score of B, a grade with the same score on the momentum front. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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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