Waste Connections, Inc. (NYSE:WCN) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Waste Connections reported US$1.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.61 beat expectations, being 9.6% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year. NYSE:WCN Earnings and Revenue Growth May 1st 2021
Following the latest results, Waste Connections’ 16 analysts are now forecasting revenues of US$5.98b in 2021. This would be a meaningful 9.0% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 216% to US$2.67. Before this earnings report, the analysts had been forecasting revenues of US$5.88b and earnings per share (EPS) of US$2.64 in 2021. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it’s surprising to see that the price target rose 5.4% to US$125. It looks as though they previously had some doubts over whether the business would live up to their expectations. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Waste Connections analyst has a price target of US$150 per share, while the most pessimistic values it at US$79.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Waste Connections shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Waste Connections’historical trends, as the 12% annualised revenue growth to the end of 2021 is roughly in line with the 13% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 7.3% annually. So it’s pretty clear that Waste Connections is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates – from multiple Waste Connections analysts – going out to 2025, and you can see them free on our platform here.
We don’t want to rain on the parade too much, but we did also find 4 warning signs for Waste Connections that you need to be mindful of.
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