Analyzing Waste Connections (WCN) and Casella Waste Systems (CWST)

Casella Waste Systems (NASDAQ: CWST) and Waste Connections (NYSE:WCN) are both industrial products companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, profitability, institutional ownership, risk, dividends and earnings.

Dividends

Waste Connections pays an annual dividend of $0.38 per share and has a dividend yield of 0.6%. Casella Waste Systems does not pay a dividend. Waste Connections pays out 32.1% of its earnings in the form of a dividend. Casella Waste Systems has increased its dividend for 7 consecutive years.

Risk & Volatility

Casella Waste Systems has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500. Comparatively, Waste Connections has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Casella Waste Systems and Waste Connections, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Casella Waste Systems 0 2 3 0 2.60
Waste Connections 0 1 9 1 3.00

Casella Waste Systems currently has a consensus target price of $16.60, suggesting a potential upside of 0.61%. Waste Connections has a consensus target price of $70.24, suggesting a potential upside of 9.53%. Given Waste Connections’ stronger consensus rating and higher probable upside, analysts clearly believe Waste Connections is more favorable than Casella Waste Systems.

Insider and Institutional Ownership

76.3% of Casella Waste Systems shares are owned by institutional investors. Comparatively, 61.2% of Waste Connections shares are owned by institutional investors. 11.5% of Casella Waste Systems shares are owned by insiders. Comparatively, 0.7% of Waste Connections shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Casella Waste Systems and Waste Connections’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Casella Waste Systems -10.01% -60.26% 3.31%
Waste Connections 7.11% 9.19% 4.59%

Earnings and Valuation

This table compares Casella Waste Systems and Waste Connections’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Casella Waste Systems $582.75 million 1.19 $112.99 million ($1.40) -11.79
Waste Connections $4.40 billion 3.84 $1.37 billion $1.18 54.19

Waste Connections has higher revenue and earnings than Casella Waste Systems. Casella Waste Systems is trading at a lower price-to-earnings ratio than Waste Connections, indicating that it is currently the more affordable of the two stocks.

Summary

Waste Connections beats Casella Waste Systems on 12 of the 17 factors compared between the two stocks.

About Casella Waste Systems

Casella Waste Systems, Inc. is a solid waste services company. The Company provides resource management services to residential, commercial, municipal and industrial customers, primarily in the areas of solid waste collection and disposal, transfer, recycling and organics services. It manages its solid waste operations on a geographic basis through two regional operating segments: Eastern and Western regions, each of which provides a range of solid waste services, and its recycling and commodity brokerage operations through its Recycling segment. Organics services, ancillary operations and industrial services are included in its Other segment. As of January 31, 2017, the Company owned and/or operated 32 solid waste collection operations, 46 transfer stations, 18 recycling facilities, nine Subtitle D landfills, four landfill gas-to-energy facilities and one landfill permitted to accept construction and demolition (C&D) materials.

About Waste Connections

Waste Connections, Inc. is a solid waste services company in North America. The Company provides waste collection, transfer, disposal and recycling services in markets in the United States and Canada. The Company operates through six segments: Southern segment, Western segment, Eastern segment, Canada segment, Central segment and E&P segment. Through its R360 Environmental Solutions subsidiary, it also provides non-hazardous exploration and production, or E&P, waste treatment, recovery and disposal services in various natural resource producing areas in the United States. It also provides intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest through a network of intermodal facilities. As of December 31, 2016, it served residential, commercial, industrial and exploration and production (E&P) customers in 40 states and the District of Columbia in the United States and five provinces in Canada.

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