Is it a good company at a reasonable price? I do not buy companies with dividends below 1%. Since this is not a growth business, probably the reason to buy is earning dividends. However, the dividend yields are very low. On the other hand, the company has a decent total return and they are making money, although a rather low ROE of 8.5% per year over the past 5 years. The stock price is probably a bit high at this point.
See charts below about dividend increase potential of this stock. After 5 years at the current 5 year yearly increases of 13.58%, yield will only be 1.42%. If dividend continues to increase at the last increase of 10.87%, then after 5 years the dividend yield would only be 1.26.
| Div Yd | Years | At IRR | Div Inc |
|---|---|---|---|
| 1.42% | 5 | 13.58% | 89.00% |
| 2.68% | 10 | 13.58% | 257.21% |
| 5.07% | 15 | 13.58% | 575.13% |
| Div Yd | Years | At IRR | Div Inc |
|---|---|---|---|
| 1.26% | 5 | 10.87% | 67.52% |
| 2.11% | 10 | 10.87% | 180.63% |
| 3.53% | 15 | 10.87% | 370.12% |
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 their action buy list. I had money because I had recently sold RIM. 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. It had two more name changes and in 2017, Progressive Waste Solutions Ltd was bought out by Progressive Waste Solutions Ltd in late 2016.
When I was updating my spreadsheet, I noticed that this company has had good growth. I am going from Progressive Waste Solutions Ltd to Waste Connections Inc. This change occurred 5 years ago, so the 5 year growth is all WCN, the 10 year growth is from BIN to WCN.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth US$ | 55.75% | 9.27% |
| 5 | AEPS Growth | 76.51% | 12.03% |
| 5 | Net Income Growth | 56.41% | 9.36% |
| 5 | Cash Flow Growth | 70.35% | 11.24% |
| 5 | Dividend Growth | 89.00% | 13.58% |
| 5 | Stock Price Growth | 86.86% | 13.32% |
| 10 | Revenue Growth US$ | 280.22% | 14.29% |
| 10 | AEPS Growth | 184.44% | 11.02% |
| 10 | Net Income Growth | 1101.54% | 28.23% |
| 10 | Cash Flow Growth | 500.57% | 19.63% |
| 10 | Dividend Growth | 152.70% | 9.71% |
| 10 | Stock Price Growth | 343.26% | 16.06% |
However, if you had invested in this company in December 2017, for $1,069.92 you would have bought 4 shares at $89.16 per share. In December 2022, after 5 years you would have received $59.69 in dividends. The stock would be worth $2,153.76. Your total return would have been $2,213.45. 5 years ago, was when Progressive Waste Solutions Ltd was bought by Waste Connection.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $89.16 | $1,069.92 | 12 | 5 | $59.69 | $2,153.76 | $2,213.45 |
The current dividend yield is low with dividend growth moderate. The current dividend is low (below 2%) at just 0.69%. The 5, 10 and historical dividend yields are also low at 0.79%, 0.84% and 1.17%. The dividend growth is moderate (8% to 14% ranges) at 13.9% per year over the past 5 years. The last dividend increase was in 2023 and it was for 10.9%.
The Dividend Payout Ratios (DPR) are fine (but seem high for such a low yield). The DPR for 2022 for Earnings per Share (EPS) is 29% with 5 year coverage at 36%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 25% with 5 year coverage at 25%. The DPR for 2022 for Cash Flow per Share (CFPS) is 12% with 5 year coverage at 12%. The DPR for 2022 for Free Cash Flow (FCF) is 18% with 5 year coverage at 20%
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 29.17% | 35.84% |
| AEPS | 24.74% | 25.42% |
| CFPS | 12.46% | 12.46% |
| FCF | 18.01% | 20.39% |
Debt Ratios are fine. The Long Term/Market Cap Ratio for 2022 is good and low at 0.20. The Liquidity Ratio for 2022 is low at 0.74, but if you add in Cash Flow after Dividends, it is good at 1.92. The Debt Ratio is good at 1.71. The Leverage and Debt/Equity Ratios are fine at 2.41 and 1.41.
| Type | Ratio '22 | Ratio Curr |
|---|---|---|
| Lg Term R | 0.20 | 0.17 |
| Intang/GW | 0.25 | 0.22 |
| Liquidity | 0.74 | 1.12 |
| Liq. + CF | 1.92 | 2.62 |
| Debt Ratio | 1.71 | 1.78 |
| Leverage | 2.41 | 2.28 |
| D/E Ratio | 1.41 | 1.28 |
The Total Return per year is shown below for years of 5 to 21 to the end of 2022 in CDN$. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2017 | 5 | 15.33% | 15.85% | 15.02% | 0.82% |
| 2012 | 10 | 13.11% | 20.75% | 19.69% | 1.05% |
| 2007 | 15 | 0.36% | 12.05% | 11.11% | 0.93% |
| 2002 | 20 | 4.35% | 14.91% | 12.71% | 2.20% |
| 2001 | 21 | 15.37% | 12.98% | 2.39% |
The Total Return per year is shown below for years of 5 to 21 to the end of 2022 in US$. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2017 | 5 | 13.58% | 14.14% | 13.32% | 0.82% |
| 2012 | 10 | 9.71% | 17.00% | 16.06% | 0.94% |
| 2007 | 15 | -1.72% | 9.89% | 9.01% | 0.89% |
| 2002 | 20 | 5.15% | 14.82% | 12.37% | 2.46% |
| 2001 | 21 | 19.27% | 15.30% | 3.97% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 35.59, 40.90, and 46.22. The corresponding 10 year ratios are 31.01, 36.38 and 41.15. The corresponding historical ratios are 25.16, 29.00 and 32.84. The current P/E Ratio is 36.31 based on a stock price of $181.18 and EPS estimate for 2023 of $4.99 ($3.74 US$). The current ratio is between the low and median ratios of the 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I also have Adjusted Earning per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 27.21, 31.06 and 38.08. The corresponding 10 year ratios are 21.62, 28.25 and 32.66. The current P/AEPS Ratio is 32.19 based on AEPS estimate for 2023 of $4.22 and a stock price of $135.83. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$, but you get a similar result in CDN$.
I get a Graham Price of $66.63. The 10-year low, median, and high median Price/Graham Price Ratios are 1.62, 1.88 and 2.13. The current P/GP Ratio is 2.72 based stock price of $181.18. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 2.71. The current P/B Ratio is 4.83 based on a stock price of $135.83, Book Value of $7,234M and Book Value per Share of $28.13. The current ratio is 78% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
I also have a Book Value per Share estimate for 2023 of $29.70. This implies a ratio of 4.57 and Book Value of $7,637.72 with a stock price of $135.83. The resulting ratio is 69% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
I get a 10-year median Price/Cash Flow per Share Ratio of 13.74. The current P/CF Ratio is 16.25 based on a stock price of $135.83, Cash Flow per Share estimate for 2023 of $8.36. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
I get an historical median dividend yield of 1.17%. The current dividend yield is 0.75% based on dividends of $1.02 and a stock price of $135.83. The current dividend yield is 36% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
I get a10 year median dividend yield of 0.84%. The current dividend yield is 0.75% based on dividends of $1.02 and a stock price of $135.83. The current dividend yield is 11% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 3.54. The current P/S Ratio is 4.32 based on a stock price of $135.83, Revenue estimate for 2023 of $8,079M, and Revenue per Share of $31.42. The current P/S Ratio is 22% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
Results of stock price testing is that the stock price could be reasonable, but at the high end of the range or into the expensive range. The 10 year dividend yield test says it is reasonable but above the median. This is not confirmed by the P/S Ratio test that says the stock is expensive (but just inside the expensive range). Most of the other testing is saying the stock price is above the median or into the expensive range.
When I look at analysts’ recommendations, I find Strong Buy (13), Buy (5), Hold (1), and Sell (2). The consensus is a Buy. The 12 months stock price consensus is $206.56 ($154.83 US$). This implies a total return of 14.76% with 14.01% from capital gains and 0.75% from dividends. Negative comments on this stock are that waste management is not a growth stock and can only grow by consolidation. Another thought that Waste Management Inc (NYSE-WM) was a better buy,
On Stock Chase there are two buys and one hold in 2023. Stock Chase gives this stock 4 stars out of 5. Vishesh Raisinghani on Motley Fool thinks this stock could be a safe haven. Amy Legate-Wolfe on Motley Fool thinks this is a good buy for small investors. The company put out a Press Release via Newswire about their 2022 results. The company put out a Press Release on their first quarter of 2023 results.
This company was reviewed by via Yahoo Finance by Zacks Equity Research. They rated it a hold. Simply Wall Street on Yahoo Finance talks about insider selling. Simply Wall Street has 1 warning of has a high level of debt. Simply Wall Street gives this stock 3 stars out of 5.
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. Waste Connections entered the Canadian market with its 2016 merger with Progressive Waste. Its web site is here Waste Connections Inc.
The last stock I wrote about was about was Lassonde Industries Inc (TSX-LAS.A, OTC-LSDAF) ... learn more. The next stock I will write about will be CI Financial Corp (TSX-CIX, NYSE-CIXX) ... learn more on Wednesday, June 21, 2023 around 5 pm. Tomorrow on my other blog I will write about My Fooling Around Money .... learn more on Tuesday, June 20, 2023 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.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment