Estimating The Intrinsic Value Of Waste Connections, Inc. (NYSE:WCN)

Simply Wall St.11-11

Key Insights Waste Connections' estimated fair value is US$199 based on 2 Stage Free Cash Flow to Equity With US$184 share price, Waste Connections appears to be trading close to its estimated ...

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(NYSE:WCN)","media":"Simply Wall St.","content":"<div>\n<p>Key Insights\n\n Waste Connections' estimated fair value is US$199 based on 2 Stage Free Cash Flow to Equity \n With US$184 share price, Waste Connections appears to be trading close to its estimated ...</p>\n\n<a href=\"https://finance.yahoo.com/news/estimating-intrinsic-value-waste-connections-130015446.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Estimating The Intrinsic Value Of Waste Connections, Inc. (NYSE:WCN)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEstimating The Intrinsic Value Of Waste Connections, Inc. (NYSE:WCN)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-11 21:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/estimating-intrinsic-value-waste-connections-130015446.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n Waste Connections' estimated fair value is US$199 based on 2 Stage Free Cash Flow to Equity \n With US$184 share price, Waste Connections appears to be trading close to its estimated ...</p>\n\n<a href=\"https://finance.yahoo.com/news/estimating-intrinsic-value-waste-connections-130015446.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FCF","symbol_name":"第一联邦金融","start_time":0,"source_url":"https://finance.yahoo.com/news/estimating-intrinsic-value-waste-connections-130015446.html","article_id":"2482812867","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/cYppHp2ry_mDEJ3zwap5hw--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/030470c488bfc719a1b699066a1274c3"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2482812867","pubTimestamp":1731330015,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Waste Connections' estimated fair value is US$199 based on 2 Stage Free Cash Flow to Equity. With US$184 share price, Waste Connections appears to be trading close to its estimated fair value. Our fair value estimate is 2.0% higher than Waste Connections' analyst price target of US$195. Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Waste Connections, Inc.  as an investment opportunity by estimating the company's future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow  model. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow.After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a coun","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"FCF":"第一联邦金融","WCN":"Waste Connections Inc","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","TV":"墨西哥电视","LU2125910336.SGD":"Natixis Thematics Water R/A SGD","BK4120":"环境与设施服务","LU0354030511.USD":"ALLSPRING  U.S. LARGE CAP GROWTH \"I\" (USD) ACC","BK4211":"区域性银行","NYSE":"纽交所","LU1923621640.USD":"Natixis Thematics Water R/A USD","LU0354030438.USD":"富国美国大盘成长基金Cl A Acc","LU2125910179.SGD":"Natixis Thematics Water H-R/A SGD","LU2463526074.USD":"NORDEA 1 - GLOBAL CLIMATE ENGAGEMENT \"BP\" (USD) ACC","BK4100":"有线和卫星"},"translate_title":"估算Waste Connections，Inc.（纽约证券交易所代码：WCN）的内在价值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DCF":1,"FCF":1,"NYSE":1,"TV":1,"WCN":1},"content_text":"Key Insights\n\n Waste Connections' estimated fair value is US$199 based on 2 Stage Free Cash Flow to Equity \n With US$184 share price, Waste Connections appears to be trading close to its estimated fair value \n Our fair value estimate is 2.0% higher than Waste Connections' analyst price target of US$195 \n\n Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Waste Connections, Inc. (NYSE:WCN) as an investment opportunity by estimating the company's future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow. \n We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. \n See our latest analysis for Waste Connections \n What's The Estimated Valuation? \n We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. \n A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: \n 10-year free cash flow (FCF) estimate \n\n\n\n\n2025\n2026\n2027\n2028\n2029\n2030\n2031\n2032\n2033\n2034\n\n\n Levered FCF ($, Millions) \nUS$1.49b\nUS$1.74b\nUS$1.96b\nUS$2.13b\nUS$2.26b\nUS$2.38b\nUS$2.48b\nUS$2.58b\nUS$2.67b\nUS$2.75b\n\n\nGrowth Rate Estimate Source\nAnalyst x10\nAnalyst x8\nAnalyst x4\nAnalyst x3\nEst @ 6.14%\nEst @ 5.09%\nEst @ 4.35%\nEst @ 3.83%\nEst @ 3.47%\nEst @ 3.21%\n\n\n Present Value ($, Millions) Discounted @ 6.7% \nUS$1.4k\nUS$1.5k\nUS$1.6k\nUS$1.6k\nUS$1.6k\nUS$1.6k\nUS$1.6k\nUS$1.5k\nUS$1.5k\nUS$1.4k\n\n\n\n(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$15b\n After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.6%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 6.7%. \nTerminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$2.8b× (1 + 2.6%) ÷ (6.7%– 2.6%) = US$69b\nPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= US$69b÷ ( 1 + 6.7%)10= US$36b\n The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$51b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US$184, the company appears about fair value at a 7.6% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. \n\n\n\n  NYSE:WCN Discounted Cash Flow November 11th 2024\n \n\n Important Assumptions \n We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Waste Connections as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.7%, which is based on a levered beta of 0.995. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. \nSWOT Analysis for Waste Connections\n\n\nStrength\n\nDebt is well covered by earnings and cashflows.\n\n\nBalance sheet summary for WCN.\n\n\n\nWeakness\n\nEarnings growth over the past year underperformed the Commercial Services industry.\n\n\nDividend is low compared to the top 25% of dividend payers in the Commercial Services market.\n\n\n\nOpportunity\n\nAnnual earnings are forecast to grow for the next 3 years.\n\n\n Current share price is below our estimate of fair value.\n\n\n\nThreat\n\n Annual earnings are forecast to grow slower than the American market.\n\n\nWhat else are analysts forecasting for WCN?\n\n\n\n Looking Ahead: \n Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to \"what assumptions need to be true for this stock to be under/overvalued?\" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Waste Connections, we've put together three important factors you should further research: \n\n Risks: We feel that you should assess the 2 warning signs for Waste Connections we've flagged before making an investment in the company. \n Future Earnings: How does WCN's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. \n Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! \n\n PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2482812867"}