Waste management firm well positioned

WASTE CONNECTIONS

This U.S.-based company, which provides nonhazardous solid waste collection, transfer, disposal, and recycling, saw its revenue go up 17.9 per cent in the first quarter of 2022, which a May Scotiabank analyst report said was in line with expectations.

The company’s stock price is more or less where it was a year ago, up around a dollar to more than $122 (U.S.) after a peak of almost $145 in April 2022.

The Scotiabank report said the company is managing inflationary pressures through pricing with success, and targeted a $135 share price. Other firms have been targeting higher, from $142 to $170.

DBRS Morningstar analyst Brian Bernard said in a recent report that the company’s secondary and rural market strategy means it faces less competition than its urban-focused competitors, contributing to its profitability.

“Waste Connections was enjoying the fruits of a successful merger integration and tailwinds from healthy U.S. macroeconomic expansion heading into 2020, but the COVID-19 pandemic threatened to interrupt the firm’s strong performance track record,” wrote Bernard.

“However, Waste Connections persevered, shining a light on the resiliency of the firm’s business model.”

Dodge predicted continued M&A activity on the horizon for Waste Connections in a May report, giving the company an Outperform rating.