Waste Connections Earnings: Pricing Remains Strong; Acquisition Adds Waste-to-Rail Disposal Network

After reviewing Waste Connections’ second-quarter financial results and 2023 outlook, we’ve raised our fair value estimate for New York Stock Exchange-listed shares about 9% to $118 per share. Waste Connections’ profit margin has outpaced our expectations this year, despite margin headwinds from lower recycled commodity prices. We’re now modeling adjusted EBITDA margin to average 31.5%-32.0% over the next five years, about 40 basis points higher than our previous outlook. Our more optimistic profit margin outlook, along with the time value of money, were key factors behind our increased fair value estimate. We raised our fair value estimate for Toronto Stock Exchange-listed shares to CAD 157.