Waste Connections shares fell by -1.1% during the day's morning session, and are now trading at a price of $167.8. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Trades Below Its Graham Number but Has an Elevated P/B Ratio:
Waste Connections, Inc. provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 17.53 and an average price to book (P/B) ratio of 1.71. In contrast, Waste Connections has a trailing 12 month P/E ratio of 56.7 and a P/B ratio of 5.62.
Waste Connections's PEG ratio is 2.33, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Strong Revenue Growth but Not Enough Current Assets to Cover Current Liabilities:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $4,923 | $5,389 | $5,446 | $6,151 | $7,212 | $7,856 |
| Operating Margins | 17% | 16% | 8% | 17% | 17% | 17% |
| Net Margins | 11% | 11% | 4% | 10% | 12% | 11% |
| Net Income (M) | $547 | $567 | $205 | $618 | $836 | $830 |
| Net Interest Expense (M) | $132 | $147 | $162 | $163 | $202 | $270 |
| Depreciation & Amort. (M) | $573 | $618 | $621 | $674 | $763 | $833 |
| Diluted Shares (M) | 264 | 265 | 264 | 262 | 258 | 258 |
| Earnings Per Share | $2.07 | $2.14 | $0.78 | $2.36 | $3.24 | $3.22 |
| CAPEX (M) | $546 | $412 | $597 | $744 | $913 | $910 |
| Total Debt (M) | $4,176 | $4,376 | $4,752 | $5,047 | $6,897 | $6,803 |
| Net Debt / EBITDA | 2.75 | 2.78 | 4.0 | 2.86 | 3.4 | 3.11 |
| Current Ratio | 1.23 | 1.12 | 1.37 | 0.84 | 0.74 | 0.73 |
