Shares of Waste Connections WCN have gained 11.8% in the past month, outpacing the industry’s 9.7% rally.
WCN’s revenues in 2026 and 2027 are expected to increase 5.7% and 6.1% year over year, respectively. Earnings are anticipated to rise 6.8% in 2026 and 12.4% in 2027.
Factors That Augur Well for WCN’s Success
Market Expansion Support Top-Line Growth: Waste Connections is well-positioned to capitalize on the global waste management market's expansion. According to Grand View Research, the market is expected to see a 6% CAGR through 2033, reaching $2.4 trillion. The company accounts for an estimated 35% of total industry revenues, making it a major player with a significant market share.
Landfill Volume Drivers: Despite disruptions faced during winter, WCN witnessed a 4% increase in landfill tons, hinting at robust demand for volume moving into facilities. This growth can be attributed to a 5% rise in Municipal Solid Waste and an 8% hike in special waste tons. The first quarter of 2026 marks the sixth consecutive quarter of high special waste activity. This momentum hints at a construction demand that can benefit the company’s broader volumes in the future.
AI-Backed Tech Optimizes Operations: WCN’s AI-fueled pricing tool supported a nearly 20% year-over-year enhancement in customer retention and pricing efficiency while ensuring strong core pricing. This tool allows the company to incorporate price hikes efficiently, retaining customers for the long term and lowering returns. Management anticipates the complete deployment of AI initiatives to boost margins by 100 basis points heading into 2028.
Shareholder-Friendly Actions: Waste Connections consistently rewards its shareholders despite fluctuations in its cash position, underscoring its dedication to creating long-term value for investors. In 2023, 2024 and 2025, Waste Connections paid out $271 million, $302 million and $334 million in dividends, respectively. Consistent dividends demonstrate the company’s commitment to returning value to shareholders and support share prices.
Risks Faced by Waste Connections
High Competition: The regulated waste collection and disposal business is characterized by very low barriers to entry, allowing competitors to raise prices rapidly to gain market share. This capital-intensive industry includes larger and better-capitalized companies, which affects its ability to invest in substantial labor and capital resources.
Weak Liquidity: At the end of the first quarter of 2026, WCN’s current ratio was pegged at 0.69, lower than the industry average of 1.08. The 1.4% dip in the current ratio from the year-ago quarter due to a rise in accounts payable and a current ratio of less than 1 indicates that the company may have problems paying off its short-term obligations.
Seasonality Hurts Revenues, Operating Risks High: WCN’s top-line is highly seasonal, with first-quarter revenues being the lowest. While revenues climb in the second and third quarters, fourth-quarter revenues are lower than the prior two quarters. The anticipated fluctuation between the highest and lowest quarters due to seasonality is around 10%. This is mainly due to the lower volume of solid waste generated during winter and early spring, owing to comparatively lesser construction and demolition activities, as well as reduced E&P activity.
WCN’s Zacks Rank & Stocks to Consider
The company has a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks from the broader Zacks Business Services sector are Ralliant Corporation RAL and Pentair PNR, currently flaunting a Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy), respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ralliant has a long-term earnings growth expectation of 8.4%. RAL delivered a trailing four-quarter earnings surprise of 8%, on average.
Pentair has a long-term earnings growth expectation of 11%. PNR delivered a trailing four-quarter earnings surprise of 3.7%, on average.
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Waste Connections, Inc. (WCN): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).