Why Waste Connections Stock Is Up Today
Key PointsAcquisitions are helping to drive Waste Connections' profits higher.
Shares of Waste Connections (WCN) experienced a significant increase on Thursday following the garbage hauler's decision to raise its cash payouts to investors. The company reported a 7% year-over-year growth in its third-quarter revenue, reaching $2.6 billion. Waste Connections operates through a growth-acquisition strategy, which has enabled it to gradually expand its waste services network.
The company's completed acquisitions so far this year are expected to contribute around $130 million in annualized revenue. Waste Connections' focus on exclusive and secondary markets provides it with strong pricing power, enabling it to increase its fees beyond the rate of inflation. This strategy has been instrumental in offsetting the impact of rising fuel costs, as diesel prices have soared.
Consequently, Waste Connections' adjusted net income increased by 7% to $399 million, with earnings per share rising 10% to $1.58, surpassing analysts' estimates of $1.52. The positive earnings results led Waste Connections to revise its full-year forecast, projecting revenue of $10.1 billion, net income of $1.2 billion, and adjusted free cash flow exceeding $1.4 billion.
Furthermore, the company raised its quarterly dividend by 10% to $0.385 per share. CEO Ronald Mittelstaedt attributed Waste Connections' strong operating performance, robust free cash flow generation, and a solid balance sheet for the anticipated double-digit annual increase in its quarterly cash dividend, marking its sixteenth consecutive increase.
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