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Waste Connections Ups 2022 Outlook on Strong Q2 Performance

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Canadian waste management firm Waste Connections’ higher-than-expected profit and revenues in the second quarter fail to spike investors’ interest.

Headquartered in Ontario, Canada, Waste Connections, Inc. (TSE: WCN) (NYSE: WCN) has raised the guidance for the full-year 2022 on the back of excellent results for the second quarter of 2022. Despite the investor-friendly announcement, WCN stock closed 0.7% down on Tuesday at C$169.42.

In the quarter, adjusted earnings grew 23.5% year-over-year to $1 per share, beating the Street’s estimate by five cents per share. Revenues increased 18.4% to $1.82 billion and surpassed expectations of $1.8 billion.

Adjusted EBITDA margin remained flat year-over-year at 31.2%.

The President and CEO of Waste Connections, Worthing F. Jackman, said, “Accelerating solid waste pricing and E&P waste activity drove a top-to-bottom beat in the period. Solid waste pricing growth of 8.8% enabled us to overcome increased inflationary pressures during the period and deliver adjusted EBITDA margin in line with our outlook for Q2.”

“Our outperformance in the first half of 2022, expected further sequential increases in solid waste pricing growth, continuing strength in E&P waste activity, and acquisitions closed year to date, position us to update our outlook for the full year to revenue of approximately $7.125 billion, adjusted EBITDA of approximately $2.190 billion and adjusted free cash flow of approximately $1.160 billion, exceeding our initial outlook as provided in February,” Jackman added.

For the full-year 2022, the solid waste management services provider expects a net income of $837.5 million and capital expenditure to total $850 million.

Earlier, the company had projected revenues to be around $6.875 billion, adjusted EBITDA of $2.145 billion, and an adjusted free cash flow of $1.150 billion.

Is Waste Connections a Good Stock?

Waste Connections could be a good investment option, as it commands a Strong Buy consensus rating based on eight Buys and one Sell. The company scores a ‘Perfect 10’ on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the market. WCN’s average price target of C$193.30 implies 14.1% upside potential from current levels.

Further, TipRanks data shows that financial bloggers are 90% Bullish on WCN, compared to the sector average of 66%.

Waste Connections’ Prospects Look Promising

Since breaking even in the first quarter of last year, the company has reported better-than-expected earnings in almost all quarters. This has helped boost the stock price by 8.3% in the last six months and 6.8% over the past year. If this trend continues, the stock could be in for more upside.

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