Waste Connections, Inc. (WCN): A Bull Case Theory

Core Thesis - Waste Connections, Inc. (WCN) is positioned as a strong investment opportunity due to its focus on underserved rural regions, operational leverage, and diversified revenue streams, with a current share price of $167.23 and a DCF-based fair value of $213.25 per share, indicating a potential upside of 23.1% [1][4]. Company Overview - WCN operates in the competitive waste collection industry, emphasizing service quality and pricing power in rural areas, similar to strategies employed by other companies like Dino Polska [2]. - The company diversifies its revenue through the treatment of non-hazardous by-products from oil and gas operations and the production of methane gas from landfills, which is converted into electricity [2]. Financial Performance - WCN's adjusted EBITDA trends show strong operational leverage, particularly in the Canada segment, which experienced a margin expansion of 4.5 percentage points and revenue growth of 26.6% [3]. - The company has total assets of $20.78 billion and debt of $8.96 billion, although it faces challenges due to a negative net cash position [4]. - WCN's median five-year revenue growth stands at 11.23%, supporting its fair value estimate [4]. Competitive Advantages - WCN operates 77 MSW landfills, 20 E&P waste landfills, and 16 non-MSW landfills, creating significant barriers to entry through regulatory compliance and geographic footprint [3]. - The company's operational efficiency is improving, as cost growth lags behind revenue growth, and it maintains a modest net margin of 11% [3]. Market Sentiment - Customer sentiment is mixed, reflecting high expectations in a concentrated industry, but WCN's resilient contracts and strategic positioning contribute to its growth potential [4].