Waste Connections, Inc. WCN stock has gained 9.6% in a year, outperforming the industry's 2.5% rise and the Zacks S&P 500 composite’s marginal decline.

WCN reported mixed fourth-quarter 2024 results. Waste Connections’ adjusted earnings (excluding $1.92 from non-recurring items) of $1.16 per share missed the Zacks Consensus Estimate by 3.3% but increased 4.5% year over year. Revenues of $2.3 billion beat the consensus estimate marginally and grew 11% from the year-ago quarter.

How is Waste Connections Faring?

The company manages its operations on a decentralized basis, placing the decision-making power close to customers. This enables WCN to identify and address customer cost-effectively needs on a real-time basis. This low-overhead, highly efficient operational structure allows it to expand into geographically contiguous markets and operate in relatively small communities that other competitors may not find attractive.

Waste Connections follows a combination of financial, market and management criteria to evaluate opportunities from acquisitions. In new markets, it uses its initial buyout as an operating base and seeks to strengthen the acquired operation's presence by providing extra services, adding customers and making “tuck-in” acquisitions of other waste companies in that market or adjacent markets.

In 2024, 2023, 2022 and 2021, WCN completed 24, 13, 24 and 30 acquisitions, respectively. These acquisitions contributed to its top line, with $529 million in 2024, $410.9 million in 2023, $552 million in 2022 and $215.39 million in 2021. The notable buyouts made by Waste Connections include American Disposal Services, Groot Industries and Progressive Waste.

Waste Connections consistently rewards its shareholders. In 2024, 2023, 2022 and 2021, the company paid out $302.3 million, $270.6 million, $243 million and $220.2 million in dividends, respectively. Such actions indicate WCN’s commitment to creating value for shareholders and underline its confidence in its business.

Meanwhile, over the years, stringent environmental, health, and safety laws and regulations have been obstructing its operations and increasing the operating costs of the company. The industry is subjected to the regular enactment of new or amended federal, state and local statutes and regulations that demand substantial capital and operational limitations.

The entry barriers into the regulated waste collection and disposal business are very low. Competitors gain higher market share utilizing aggressive pricing strategy. Larger and better-capitalized companies compel WCN to invest in substantial labor and capital resources to stay ahead of the pack. All these factors hurt the profitability and margins of the company.

Waste Connections' current ratio (a measure of liquidity) at the end of the fourth quarter of 2024 was 0.65, lower than the industry average of 0.89 and declining 16.3% from the preceding quarter. A current ratio of less than 1 indicates ineffective short-term debt coverage ability.

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Zacks Rank & Stocks to Consider

WCN has a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks in the broader Zacks Business Services sector are Qifu Technology, Inc. QFIN and Steelcase SCS.

Qifu Technology sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

QFIN has a long-term earnings growth expectation of 11.3%. It delivered a trailing four-quarter earnings surprise of 14.5% on average.

Steelcase currently flaunts a Zacks Rank of 1.

SCS has a long-term earnings growth expectation of 10%. It delivered a trailing four-quarter earnings surprise of 31.5%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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