I do not own this stock of Waste Connections Inc. (TSX-WCN, NYSE-WCN), but I used to. I first bought this stock in 2007 because TD Securities had a very favorable report on this stock and had it on it action buy lists. At that time it was BFI Canada Income Fund. In 2010, I needed to buy something for Pension Account. I have this already and it is on TD Action Buy List. I sold when it because the target of a reverse takeover by an American company.
Revenue, Net Income and Cash Flow has gone up spectacularly for this company over the past 5 and 10 years. Revenue is up 17% to 19% per year, Net Income is up by 44% and 34% per year and Cash Flow up 29% and 18% per year over these periods. However, what really counts is per share increases and they are a lot lower due to increases in the number of shares. Revenue per Share is down by 12.5% and 6% per year, EPS is up by 7% and 6% per year and Cash Flow is down by by 6% and 6% per year over the same periods.
The lack of good recent earnings per share is showing up in the low increase in Book Value per Share which is up less than 1% over the past 5 and 10 years.
For Canadians, the dividend story is complex. Progressive Waste Solutions started off as an income fund. When it changed to a corporation it decreased its dividends by some 72%. Dividends were increased again after that, but the takeover by Waste Connection Inc. had initially a lower dividend. If you look at the chart below, it has been a mixed bag for investors. Dividends are up over the past 5 years and down over the past 10 and almost level over the past 15 years with increases just below 1% per year.
Dividend yields are low to moderate. The current dividend yield is just 0.73%. The 5, 10 and historical median dividend yields are 0.97%, 1.15% and 2.10%. The last dividend increase was in 2017 and it was for 16.7%.
Dividends are now paid in US$. They can afford them as the Dividend Payout Ratio for 2017 was 23% with 5 year coverage at 21%. The DPR for CFPS for 2017 was 10% with 5 year coverage at 7%.
The Long Term Debt/Market Cap Ratio is 0.21. This is a health ratio. The Liquidity Ratio for 2017 was 1.47 which is a bit low as I like it to be at 1.50 or above. The 5 year median is 1.00 which is making current liabilities level with current assets. The Debt Ratio is better at 2.09 with a 5 year median at 1.61. Leverage and Debt/Equity Ratios are good at 1.91 and 0.91 respectively.
The Total Return per year is show below for years of 5 to 16. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
As you can see from the chart below, shareholders have done well over the past 16 years of this company. The future may be hard to tell because of the amalgamation of Progressive Waste Solutions with Waste Connections Inc.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 10.94% | 25.64% | 24.56% | 1.08% |
| 10 | -6.37% | 10.29% | 9.21% | 1.08% |
| 15 | 0.92% | 14.64% | 11.95% | 2.69% |
| 16 | 15.24% | 12.35% | 2.89% |
The 5 year low, median and high median Price/Earnings per Share Ratios are 14.12, 17.09 and 20.06. The corresponding 10 year ratios are 13.95, 17.73 and 21.30. The corresponding historical ratios are 15.60, 19.32 and 24.67. The current P/E Ratio is 34.76 based on 2018 EPS estimate of $2.87 ($2.21 US$) and a stock price of $99.66. This stock price testing suggests that the stock is relatively expensive. This was done in CDN$.
I get a Graham Price of $44.65. The 10 year low, median and high median Price/Graham Price Ratios are 0.90, 1.05 and 1.22. The Current P/GP Ratio is 2.23 based on a stock price of $99.66. This stock price testing suggests that the stock is relatively expensive. This was done in CDN$.
I get a 10 year median Price/Book Value per Share of 1.37. The current P/B Ratio is 3.22 based on BV of $6,275M, Book Value per Share of $23.83 and a stock price of $76.73. The current P/B Ratio is some 135% above the 10 year median ratio. This stock price testing suggests that the stock is relatively expensive. This was done in US$. You would get a similar answer in CDN$.
I get an historical median dividend yield of 2.10%. The current dividend yield is 0.73% based on dividends of $0.73 CDN$ ($0.56 US$) and a stock price of $99.66. The current dividend yield is some 65% below the historical one. This stock price testing suggests that the stock is relatively expensive. This was done in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 0.73. The current P/S Ratio is 4.12 based on 2018 Revenue estimate of $4,904, Revenue per Share of $18.62 and a stock price of $76.73. The current ratio is some 325% higher than the 10 year ratio. This stock price testing suggests that the stock is relatively expensive. This was done in US$.
When I look at analysts’ recommendations I find Strong Buy (1), Buy (1) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus would be $83.89 US$ or $108.82 CDN$. The total return would be 10.33% with 9.19% from capital gains and 0.94% from dividends based on a current price of $99.66 CDN$.
Kurt Siggers Frisco Fastball talks about recent analysts’ recommendations on this stock. Fisher Staff Writer says on Fisher Business News that ADX for Waste Connections Inc. is 33.60 which suggests a strong trend. Ambrose O'Callaghan on Motley Fool thinks that it would be best to wait for a better entry point for this stock. See what analysts are saying about this stock on Stock Chase. Analysts think it is growing well by acquisitions.
Waste Connections Inc. is a solid waste services company in North America. The company provides waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets in the United States, and Canada. Its web site is here Waste Connections Inc.
The last stock I wrote about was about was Power Corp of Canada (TSX-POW, OTC-PWCDF)... learn more. The next stock I will write about will be Intertape Polymer Group Inc. (TSX-ITP, OTC-ITPOF)... learn more on Wednesday, June 13, 2018 around 5 pm. Tomorrow on my other blog I will write about Next Recession.... learn more on Tuesday, June 12, 2018 around 5 pm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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