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Waste Connections: Pricing Power, Margin Improvement Initiatives Drive A Positive Business Outlook

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GS Investing


  • Despite a decline in volume, WCN reported strong 2Q23 results with impressive price increases outpacing competitors.
  • WCN's focus on shedding low-margin contracts and improving employee retention rates is expected to drive margin improvement and earnings growth.
  • The recent acquisition of Arrowhead strengthens WCN's competitive position and offers strategic advantages for further expansion in the Northeast US market.
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I recommended a buy rating for Waste Connections (TSX:WCN:CA)(NYSE:WCN) when I wrote about it the last time, as I expected volume would improve as the seasons began to shift in WCN's favor and that

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GS Investing profile picture
I consider an investment ideal if it performs its core business in a sector projected to experience structural (organic) growth in excess of GDP growth over the next 5-10 years; profits from sustainable competitive advantages that translate into attractive unit economics; In the hands of competent, ethical, and long-term thinkers; with a fair valuation

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (1)

I continue to hold both WCN and WM. Together, they make up the bulk of my allocation to Industrials. They are slow compounders, not a swing trade, but they check a lot of boxes.

WCN has a strong moat with little route overlap with WM or RSG. Waste collection is defensive in nature and it has the pricing power to get through periods of low volume (recession, covid, etc). They have little to no exposure to China, except for sales of recyclables, so no geopolitical issues to worry about. Municipal budgets remain in pretty good shape for the most part, not worried about soft contracts. This year, they are doing a lot better than my industrials that are focused on Defense or Manufacturing.

There is one thing I would lke to know and that is why the CEO abruptly quit WCN and the Board last April. I'm fine having the founder back, but they paid a fortune to get a non-compete clause out of Worthing Jackman and it expires in three years.
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