Waste management company Waste Connections (NYSE: WCN) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 7.5% year on year to $2.23 billion. Its GAAP profit of $0.93 per share was 2.4% below analysts’ consensus estimates.
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Waste Connections (WCN) Q1 CY2025 Highlights:
- Revenue: $2.23 billion vs analyst estimates of $2.22 billion (7.5% year-on-year growth, in line)
- EPS (GAAP): $0.93 vs analyst expectations of $0.95 (2.4% miss)
- Operating Margin: 17.5%, in line with the same quarter last year
- Free Cash Flow Margin: 14.8%, similar to the same quarter last year
- Market Capitalization: $51.12 billion
Company Overview
Operating a network of municipal solid waste landfills in the U.S. and Canada, Waste Connections (NYSE: WCN) is North America's third-largest waste management company providing collection, disposal, and recycling services.
Waste Management
Waste management companies can possess licenses permitting them to handle hazardous materials. Furthermore, many services are performed through contracts and statutorily mandated, non-discretionary, or recurring, leading to more predictable revenue streams. However, regulation can be a headwind, rendering existing services obsolete or forcing companies to invest precious capital to comply with new, more environmentally-friendly rules. Lastly, waste management companies are at the whim of economic cycles. Interest rates, for example, can greatly impact industrial production or commercial projects that create waste and byproducts.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Waste Connections grew its sales at an impressive 10.5% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Waste Connections’s annualized revenue growth of 10.3% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong. 
This quarter, Waste Connections grew its revenue by 7.5% year on year, and its $2.23 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 6.4% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Operating Margin
Waste Connections has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 14.1%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Looking at the trend in its profitability, Waste Connections’s operating margin rose by 4.1 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, Waste Connections generated an operating profit margin of 17.5%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Waste Connections’s EPS grew at a weak 1.9% compounded annual growth rate over the last five years, lower than its 10.5% annualized revenue growth. We can see the difference stemmed from higher interest expenses or taxes as the company actually grew its operating margin and repurchased its shares during this time.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Waste Connections, its two-year annual EPS declines of 14.4% show it’s continued to underperform. These results were bad no matter how you slice the data.
In Q1, Waste Connections reported EPS at $0.93, up from $0.89 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Waste Connections’s full-year EPS of $2.43 to grow 100%.
Key Takeaways from Waste Connections’s Q1 Results
It was good to see Waste Connections meet analysts’ revenue expectations this quarter. On the other hand, its EPS missed. Overall, this was a weaker quarter. The stock remained flat at $196.57 immediately after reporting.
Is Waste Connections an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
