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 its action buy lists. I had money because I had recently sold RIM. At that time, it was called BFI Canada Income Fund. In 2010, I needed to buy something for my 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. The company has gone through a number of name changes.
When I was updating my spreadsheet, I noticed per share values have dropped a lot over the past 5 and 10 years because of the big increase in shares in 2016. In 2016 Progressive Waste Solutions Ltd, a Canadian company was amalgamated with Waste Connections Inc, an American company. It really was a reverse merger.
If you look at revenue, the 5 and 10 year revenue growth is 19% and 18% per year. However, the revenue per share is down over the same periods by 13% and 5% per year. EPS is fine, but the CFPS follows the revenue were the 5 and 10 year growth in Cash Flow is 26% and 21% per year, but the CFPS is lower by 8 and 3% per year.
The current dividend yields are very low, but they were high when this was the Canadian company of Progressive Waste Solutions and before 2010. The current dividend yield s just 0.69%. The 5, 10 and historical dividend yields are 0.94%, 1.13% and 1.31%.
I am following Progressive Waste Solutions into Waste Connections Inc. Under Progressive Waste Solutions, the dividends went up and down. Dividends were paid in CDN$ until 2017. I looked at a chart for WCN on the NYSE and it shows dividends going up and down and also being suspended. It does not appear that dividends are an important part of the return on this stock.
The Dividend Payout Ratios are good. The DPR for EPS in US$ is 28% for 2018 with 5 year coverage at 24%. The DPR for CFPS for 2018 in US$ is 11% with 5 year coverage at 8%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2018 is low and good at 0.21. The Liquidity Ratio for this stock is lower than what I would like with the 2018 ratio at 1.27 and the 5 year median at 1.20. I prefer this ratio to be 1.50 and higher. The Debt Ratio is high and good at 2.05 with 5 year median at 2.02. The Leverage and Debt/Equity Ratios are low and good at 1.95 and 0.95 respectively. The 10 year median ratios are a little higher at 2.22 and 1.22 respectively.
The Total Return per year is shown below for years of 5 to 17 to the end of 2018 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 15.80% | 23.79% | 22.74% | 1.05% |
| 2008 | 10 | -4.17% | 23.00% | 21.43% | 1.57% |
| 2003 | 15 | -0.24% | 12.35% | 10.37% | 1.98% |
| 2001 | 17 | 2.34% | 15.20% | 12.42% | 2.78% |
The Total Return per year is shown below for years of 5 to 16 to the end of 2018 in US$.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 10.18% | 17.67% | 16.72% | 0.95% |
| 2008 | 10 | -5.20% | 21.97% | 20.16% | 1.82% |
| 2003 | 15 | -0.60% | 14.52% | 11.74% | 2.78% |
| 2002 | 16 | 3.28% | 14.48% | 11.57% | 2.91% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 25.19, 29.56 and 33.93. The corresponding 10 year ratios are 14.99, 18.65 and 22.15. The historical ratios are 15.87, 19.50 and 25.58. The current P/E Ratio is 39.02 based on a stock price of $126.70 and 2019 EPS Estimate of $3.25. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get a Graham Price of $49.86. The 10 year low, median, and high median Price/Graham Price Ratios are 0.93, 1.10 and 1.27. The current P/GP Ratio is 2.54 based on a stock price of $126.70. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 1.51. The current P/B Ratio is 3.79 based on a Book Value of $6,563M, Book Value per Share of $24.94 and a stock price of $94.46. The current ratio is 151% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$.
I get an historical median dividend yield of 0.69%. The historical median dividend yield is 1.31% based on dividends of $0.87 and a stock price of $126.70. The current yield is 47% below the historical one. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 1.06. The current P/S Ratio is 4.62 based on 2019 Revenue estimate of $5,375M, Revenue per Share of $20.43 and a stock price of $94.16. The current ratio is 335% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$.
Results of stock price testing is that the stock price is relatively expensive. Some of the testing is in US$ and some in CDN$, but for each test you will get a similar answer using either currency.
When I look at analysts’ recommendations, I find Strong Buy (1), Hold (1). The consensus would be a Buy. The 12 month stock price of $96.14 US$ or $131.15 CDN$. This implies a total return of 4.20% with 3.52% from capital gains and 0.69% from dividends.
See what analysts are saying on Stock Chase. They like the stock and see industry consolidation in future. Victoria Hetherington on Motley Fool likes this stock, but mentions the low yield. A writer on Simply Wall Street likes this big company and says that debt is under control. There is an interesting article on this company at Construction Equipment Guide. In a imply Wall Street article on Yahoo Finance the writer suggests that the ROE for this company is lower than average.
Waste Connections is the third- largest integrated provider of traditional solid waste and recycling services in the North America. The firm serves residential, commercial, industrial, and energy end markets. 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 19, 2019 around 5 pm. Tomorrow on my other blog I will write about Toronto Money Show.... learn more on Tuesday, June 18, 2019 around 5 pm.
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