Ongoing geopolitical tensions and uncertainty surrounding disruptions linked to the factitious intelligence growth have heightened volatility in Canadian fairness markets. Regardless of this, the S&P/TSX Composite Index has gained greater than 31% over the previous 12 months and at the moment sits simply 0.9% under its all-time excessive.
In distinction, Waste Connections (TSX: WCN) has underperformed the broader market, declining by greater than 16% throughout the identical interval and buying and selling 21.7% under its 52-week excessive. Decrease recycled commodity costs, diminished renewable vitality credit tied to landfill gasoline gross sales, softer strong waste volumes, and restricted progress in reopening the Chiquita Canyon landfill, which was shut down on the finish of 2024, seem to have dampened investor sentiment, dragging the strong waste administration firm’s inventory value down.
Following this current pullback, let’s study the corporate’s fourth-quarter outcomes, development outlook, and valuation to find out whether or not the present weak spot presents a gorgeous shopping for alternative.
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WCN’s fourth-quarter efficiency
WCN reported fourth-quarter income of US$2.37 billion, up 5% yr over yr. Contributions from acquisitions accomplished over the previous 4 quarters, together with beneficial pricing of 6.4%, greater than offset weaker volumes and decrease commodity costs, supporting total income development. In 2025, the corporate accomplished 19 acquisitions, including US$58 million to fourth-quarter income. Nonetheless, complete volumes declined 2.7% on account of intentional shedding, price-volume trade-offs, and continued softness within the extra cyclical segments of the enterprise.
Backed by top-line development and strong execution, WCN generated adjusted EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortization) of US$796 million, representing an 8.7% enhance from the prior yr. Its adjusted EBITDA margin expanded 110 foundation factors to 33.5%, exceeding administration’s steerage. Enhancements in worker turnover — which reached a three-year low — and a discount in security incidents contributed to value financial savings, productiveness beneficial properties, and enhanced customer support, supporting margin enlargement.
Moreover, adjusted earnings per share (EPS) got here in at US$1.29, up 11.2% from the identical quarter final yr. With its fourth-quarter efficiency in perspective, let’s now flip to the corporate’s development prospects.
WCN’s development prospects
WCN seems well-positioned for long-term development because it continues to prioritize each natural enlargement and strategic acquisitions. The corporate is steadily constructing out its renewable pure gasoline (RNG) portfolio, with 5 amenities at the moment in operation and a number of other further amenities anticipated to return on-line by the top of this yr. Administration additionally anticipates bringing a brand new state-of-the-art recycling facility into service subsequent yr. Backed by a powerful stability sheet and a wholesome monetary place, WCN intends to keep up an energetic acquisition technique to strengthen its footprint.
Along with these enlargement initiatives, the corporate is investing in AI-driven options to reinforce effectivity and productiveness. By additional digitizing and automating operations and leveraging superior knowledge analytics to enhance forecasting, WCN goals to optimize efficiency. Its dynamic routing platform helps enhance asset utilization, whereas higher worker engagement and security metrics have diminished voluntary turnover and enhanced buyer satisfaction and retention. Collectively, these efforts ought to assist decrease working prices and assist margin enlargement.
Wanting forward, administration expects 2026 income within the vary of US$9.90–US$9.95 billion, with the midpoint implying 4.8% year-over-year development. Adjusted EBITDA might enhance by greater than 6%, whereas adjusted free money circulate might attain US$1.4–US$1.45 billion, with the midpoint reflecting a 13.2% enhance from the prior yr. Total, the corporate’s development outlook stays strong.
Buyers’ takeaway
Following the current pullback, WCN now trades at extra affordable valuation ranges, with its next-12-month price-to-sales and price-to-earnings multiples at 4.2 and 29.7, respectively.
The corporate has additionally persistently rewarded shareholders by means of dividend development and share repurchases. Final yr alone, it returned $830 million to buyers through dividends and buybacks, underscoring its sturdy money circulate era and shareholder-friendly capital allocation technique.
Contemplating its strong long-term development prospects, disciplined acquisition technique, increasing renewable vitality footprint, and dedication to returning capital, I imagine WCN could possibly be a gorgeous purchase for long-term buyers, regardless of potential near-term volatility.