• For investors considering whether Waste Connections at around US$153.57 represents fair value or a potential opportunity, this article explains what the current price may indicate.
• The stock has come under recent pressure, with a 6.8% decline over the last week, a 6.4% decline over the last month, and a 20.8% decline over the last year. This comes despite 3 year and 5 year returns of 9.3% and 32.4% respectively.
• Recent coverage has examined how the stock's pullback compares with the broader Commercial Services sector and what that may suggest for sentiment toward waste management companies. Commentators have also been assessing how Waste Connections fits into portfolios that aim for a mix of defensive characteristics and long term capital growth potential.
• On Simply Wall St's 6 point valuation framework, Waste Connections currently scores 3 out of 6. The rest of this article will break that down using multiple valuation approaches and will also introduce a more comprehensive way to think about value at the end.

Approach 1: Waste Connections Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a stock could be worth by projecting the cash the company may generate in the future and then discounting those cash flows back to today.

For Waste Connections, the model used is a 2 Stage Free Cash Flow to Equity approach, based on its recent free cash flow of about $1.24b. Analyst forecasts and subsequent extrapolations indicate projected free cash flow of about $2.17b by 2030, with a series of annual projections between 2026 and 2035 that are discounted back to reflect their value in today’s dollars.

Putting those cash flows together, the DCF output suggests an estimated intrinsic value of about $211.39 per share. Compared with the current share price of around $153.57, this indicates the stock is trading at roughly a 27.4% discount to the DCF estimate, which suggests undervaluation on this model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Waste Connections is undervalued by 27.4%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Waste Connections Price vs Earnings

For profitable companies, the P/E ratio is a useful shorthand because it links what you pay for each share directly to the earnings that support it. Investors usually accept a higher P/E when they expect stronger earnings growth or see lower perceived risk, and a lower P/E when growth expectations are more modest or risks are higher.

Waste Connections currently trades on a P/E of 37.01x. That sits above the Commercial Services industry average of 22.30x and also above the peer group average of 33.23x. On the surface, that suggests the stock carries a richer earnings multiple than many of its closest comparisons.

Simply Wall St’s Fair Ratio for Waste Connections is 27.75x. This is a proprietary estimate of what a reasonable P/E could be, given factors such as earnings growth, profit margins, industry, market cap and risk profile. Because it is tailored to the company rather than just comparing headline multiples, the Fair Ratio can offer a more rounded reference point than broad industry or peer averages. With the current P/E of 37.01x sitting above the Fair Ratio of 27.75x, the stock screens as expensive on this metric.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 18 top founder-led companies.

Upgrade Your Decision Making: Choose your Waste Connections Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives take the story you believe about a company, such as your view of its future revenue, earnings and margins, and link that story directly to a forecast and an estimated fair value that you can compare with the current price.

On Simply Wall St’s Community page, Narratives are an accessible tool used by millions of investors, allowing you to capture your own assumptions in a structured forecast and then see how your fair value estimate moves relative to the live market price so you can judge whether the stock looks cheap, rich or in line with your expectations at any point in time.

Because Narratives are refreshed when new information such as earnings or news is added, your fair value view is not static. You can see in one place how a more cautious Waste Connections narrative that points to a fair value of about US$156 can sit alongside a more optimistic view closer to US$305. This can help you decide which story, and which implied valuation, aligns better with your own expectations before you act.

Do you think there's more to the story for Waste Connections? Head over to our Community to see what others are saying!

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.