Waste Connections Earnings: Strong Operating Results Overshadowed by Near-Term Headwinds

Wide-moat-rated Waste Connections' solid third-quarter results were overshadowed by nonrecurring costs incurred during the quarter. Despite meaningful adjusted EBITDA margin improvement, shares declined nearly 7% on Oct. 26 as the market digested the news that issues with two of the company's landfills could affect revenue, operating expenses, and free cash flow by up to $20 million during the fourth quarter. Nevertheless, we maintained our $121 per share fair value estimate for New York Stock Exchange-listed shares. We raised our fair value estimate for Toronto Stock Exchange-listed shares CAD 1 to CAD 167 due to the change in the USD/CAD ratio since our last update.