Is it a good company at a reasonable price? It is interesting that Motley Fool Canada is quite positive about this stock, but Simply Wall Street is rather negative. There is no recent article on Motley Fool US. There are quite a few analysts following this stock. A lot of them like it, but there are analysts that disagree. The company is growing and is expected to continue to grow. Shareholders have done well in the past. However, the stock maybe on the pricey side.
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. 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. I do not regret selling it, even though it has done well since.
When I was updating my spreadsheet, I noticed this stock is growing very well. See chart below. Growth over last 5 years is slower than last 10 years.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth US$ | 62.95% | 10.26% | 2.15% | <-12 mths |
| 5 | AEPS Growth | 66.27% | 10.70% | 22.70% | <-12 mths |
| 5 | Net Income Growth | 39.48% | 6.88% | 4.23% | <-12 mths |
| 5 | Cash Flow Growth | 50.71% | 8.55% | 2.25% | <-12 mths |
| 5 | Dividend Growth | 81.03% | 12.60% | 8.57% | <-12 mths |
| 5 | Stock Price Growth | 101.04% | 14.99% | 12.96% | <-12 mths |
| 10 | Revenue Growth US$ | 295.94% | 14.75% | 9.84% | <-this year |
| 10 | AEPS Growth | 134.08% | 8.88% | 13.84% | <-this year |
| 10 | Net Income Growth | 546.61% | 20.52% | 42.63% | <-this year |
| 10 | Cash Flow Growth | 371.86% | 16.78% | 11.59% | <-this year |
| 10 | Dividend Growth | 193.89% | 11.38% | 10.48% | <-this year |
| 10 | Stock Price Growth | 335.61% | 15.85% | 12.96% | <-this year |
In dealing with US/CDN exchange rates, I generally use exchange rates at year end. For estimates, I use the current exchange rates. However, the exchange rates vary and are mostly published daily. I use the exchange rate site of Sauder School of Business, U of BC U of BC.
If you had invested in this company in December 2013, for $1,018.41 you would have bought 28 shares at $36.37 per share. In December 2023, after 10 years you would have received $238.42 in dividends. The stock would be worth $5,540.08. Your total return would have been $5,778.50. This would be a total return of 19.48% per year with 18.46% from capital gain and 1.03% from dividends. This is in CDN$.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $36.37 | $1,018.41 | 28 | 10 | $238.42 | $5,540.08 | $5,778.50 |
If you had invested in this company in December 2013, for $1,028.02 you would have bought 30 shares at $34.27 per share. In December 2023, after 10 years you would have received $195.56 in dividends. The stock would be worth $4,478.10. Your total return would have been $4,673.66. This would be a total return of 16.77% per year with 15.85% from capital gain and 0.92% from dividends. This is in US$.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $34.27 | $1,028.02 | 30 | 10 | $195.56 | $4,478.10 | $4,673.66 |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%) at 0.66%. The 5, 10 and historical dividend yields are also low at 0.76%, 0.80% and 1.16%. The dividend increases are moderate (8% to 14% ranges) at 12.6% per year over the past 5 years. The last dividend increase was in 2023 and it was for 11.8%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 36% with 5 year coverage at 27%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 25% with 5 year coverage at 26%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 13% with 5 year coverage at 13%. The DPR for 2023 for Free Cash Flow (FCF) is good at 23% with 5 year coverage at 23%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 35.59% | 37.18% |
| AEPS | 25.06% | 25.69% |
| CFPS | 12.80% | 12.76% |
| FCF | 22.68% | 22.74% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.17 and currently at 0.17. The Liquidity Ratio for 2023 is too low at 0.68 and 0.75 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.78 and currently at 2.02. The Debt Ratio for 2023 is good at 1.75 and 1.69 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.33 and 1.33 and currently at 2.45 and 1.45.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.17 | 0.17 |
| Intang/GW | 0.23 | 0.21 |
| Liquidity | 0.68 | 0.75 |
| Liq. + CF | 1.78 | 2.02 |
| Debt Ratio | 1.75 | 1.69 |
| Leverage | 2.33 | 2.45 |
| D/E Ratio | 1.33 | 1.45 |
The Total Return per year is shown below for years of 5 to 22 to the end of 2023 in CDN$. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 11.91% | 15.15% | 14.32% | 0.83% |
| 2013 | 10 | 13.84% | 19.48% | 18.46% | 1.03% |
| 2008 | 15 | 0.91% | 20.46% | 19.01% | 1.45% |
| 2003 | 20 | 2.67% | 12.99% | 11.35% | 1.64% |
| 2001 | 22 | 4.54% | 15.19% | 12.85% | 2.34% |
The Total Return per year is shown below for years of 5 to 22 to the end of 2023 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 12.60% | 15.85% | 14.99% | 0.86% |
| 2013 | 10 | 11.38% | 16.77% | 15.85% | 0.92% |
| 2008 | 15 | 0.39% | 20.01% | 18.41% | 1.60% |
| 2003 | 20 | 2.55% | 14.82% | 12.55% | 2.27% |
| 2001 | 22 | 5.43% | 19.05% | 15.17% | 3.88% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 41.25, 47.63 and 51.42. The corresponding 10 year ratios are 33.29, 40.08 and 45.42. The corresponding historical ratios are 25.17, 29.28 and 33.39. The current P/E Ratio is 41.04 based on a stock price of $237.44 and EPS estimate for 2024 of $5.79 ($4.22 US$). The current 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 CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 30.20, 33.01 and 38.08. The corresponding 10 year ratios are 25.15, 28.51 and 34.13. The current P/AEPS Ratio is 41.30 based on a Stock Price of $173.05 and AEPS estimate for 2024 of $4.77. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
I get a Graham Price of $78.11. The 10-year low, median, and high median Price/Graham Price Ratios are 1.90, 2.18 and 2.47. The current P/GP Ratio is 3.04 based on a stock price of $237.44. The current ratio is above the 10 year median high ratio. This stock price testing suggests that the stock price is relatively reasonable expensive. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 2.89. The current P/B Ratio is 5.73 based on a stock price of $173.05, Book Value per Share of $30.19 and Book Value of $7,787M. The current ratio is 98% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
I also have a Book Value per Share estimate for 2024 of $32.00. This implies a Book Value of $8,255M and a ratio of 5.41 based on a stock price of $173.05. This ratio is 87% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 13.95. The current P/CF Ratio is 18.81 based on a stock price of $173.05, Cash Flow per Share estimate for 2024 of $9.20, and Cash Flow of $2,373M. The current ratio is 35% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
I get an historical median dividend yield of 1.16%. The current dividend yield is 0.66% based on a stock price of $173.05 and dividends of $1.14. The current ratio is 43% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
I get a 10 year median dividend yield of 0.80%. The current dividend yield is 0.66% based on a stock price of $173.05 and dividends of $1.14. The current ratio is 17% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 3.73. The current P/S Ratio is 5.07 based on a stock price of $173.05, Revenue estimate for 2024 of $8,811M and Revenue per Share of $34.16. The current ratio is 36% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably on the expensive side. The 10 year median dividend yield test says the stock price is reasonable but above the median. The P/S Ratio testing does not confirm this and says the stock price is relatively expensive. A lot of the testing I have done says the stock price is relatively expensive.
When I look at analysts’ recommendations, I find Strong Buy (10), Buy (5), Hold (5), Underperform (1) and Sell (1). This is quite widely spread. The consensus would be a Buy. The 12 months stock price consensus is $253.60 ($184.80 US$), with a High of $297.79 ($217.00 US$) and low of $185 ($135.00 US$). The 12 month consensus implies a total return of $7.48% with 6.81% from capital gains and 0.67% from dividends.
There are 3 recommendations on Stock Chase and all say they like to company and the management. Stock Chase gives this stock 4 stars out of 5. Kay Ng on Motley Fool says to buy because they will raise their dividends later in the year. Rajiv Nanjapla on Motley Fool says to best Canadian stock to buy now. The company put out a press release via newswire about their 2023 year-end report. The company put out a press release via Newswire about their first quarter of 2024.
Simply Wall Street put out a report on this stock via Yahoo Finance. It is a rather negative report. Simply Wall Street has one warning of has a high level of debt. Interestingly, Simply Wall Street gives this stock 1 and one half stars out of 5, compared to Stock Chase of 4 out of 5.
Waste Connections is an integrated solid waste services company that provides non-hazardous waste collection, transfer, disposal and recycling services across the U.S. and Canada. 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 Friday, June 21, 2024 around 5 pm. Tomorrow on my other blog I will write about Dividends in Hand Blogger.... learn more on Thursday, June 20, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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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