• Wondering whether Waste Connections at around US$159.03 is offering fair value or not is a natural question if you are tracking the stock for the long term.
• Recently, the share price gained 5.4% over the last week and 5.3% over the past month, but is still down 8.7% year to date and 15.3% over the past year. This can change how investors think about both upside and risk.
• Recent coverage has focused on how the stock's longer term returns of 18.8% over three years and 36.7% over five years compare with the more recent pullback. This raises questions about whether the current price reflects a reset in expectations or a temporary pause, and this context has pushed valuation back to the forefront for many investors watching the stock.
• Simply Wall St currently assigns Waste Connections a value score of 3 out of 6, based on how many valuation checks suggest the stock is undervalued. The next sections will walk through those methods before finishing with a different angle that can help you make more sense of the valuation story.

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

A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting the company’s future cash flows and discounting them back to today’s dollars. It is essentially asking what those future streams of cash are worth right now.

For Waste Connections, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $1.24b, and analysts and internal estimates project free cash flow reaching about $2.17b by 2030. The ten year path between those points is built from a mix of analyst forecasts for the earlier years and extrapolated figures for the later years, all expressed in dollars and then discounted to reflect time and risk.

Pulling this together, the DCF model produces an estimated intrinsic value of $218.31 per share. Compared with a recent share price of about $159.03, this implies the stock trades at roughly a 27.2% discount to that estimate, based on this model alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Waste Connections is undervalued by 27.2%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.

Approach 2: Waste Connections Price vs Earnings

For a profitable company, the P/E ratio is a useful way to link what you pay for the stock with the earnings it produces. It helps you see how many dollars investors are currently willing to pay for each dollar of earnings.

What counts as a "normal" or "fair" P/E depends on expectations for future earnings growth and the level of risk investors see in the business. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk typically lines up with a lower P/E.

Waste Connections currently trades on a P/E of 38.32x. That stands above the Commercial Services industry average of 21.36x and above the peer group average of 31.70x. Simply Wall St’s proprietary Fair Ratio for Waste Connections is 24.18x. This is an estimate of the P/E that would line up with factors such as the company’s earnings growth profile, industry, profit margin, market cap and specific risks.

The Fair Ratio is more tailored than a simple peer or industry comparison because it adjusts for those company specific drivers rather than assuming that all businesses in the same sector should trade on similar multiples. Comparing the current 38.32x P/E with the Fair Ratio of 24.18x indicates the stock is pricing in a richer multiple than that model implies.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Waste Connections Narrative

Earlier it was mentioned that there is an even better way to understand valuation. This is where Narratives come in, giving you a simple way to attach your story about Waste Connections to specific forecasts for revenue, earnings and margins, then link that to a Fair Value you can compare with the current share price.

A Narrative on Simply Wall St’s Community page is your view. For example, Waste Connections might be closer to the more cautious US$156.00 Fair Value or nearer the more optimistic US$254.62 Fair Value, backed by explicit assumptions about things like revenue growth, profit margins, P/E and discount rates.

Because Narratives on the platform are refreshed when new news or earnings land, you can quickly see how a change in information affects Fair Value in your preferred story and decide whether the current price makes the stock look expensive, cheap or roughly in line with your expectations.

For Waste Connections, we will make it really easy for you with previews of two leading Waste Connections Narratives:

On Simply Wall St’s Community page, each Narrative connects specific revenue, margin and valuation assumptions to a Fair Value estimate you can compare with the current share price. That gives you a clear way to decide which story best matches your own view on the stock.

Fair Value: US$204.32

Implied discount to this Fair Value vs the recent price of about US$159.03: 22.2%

Revenue growth assumption: 5.8% a year

• Focuses on effective pricing, acquisitions and employee retention supporting revenue growth and higher margins over time.
• Includes potential benefits from safety improvements, recycling facilities and a solid balance sheet to support acquisitions.
• Builds in risks from weather, acquisition execution, interest rates and commodity-exposed revenue, and ties all of this to an analyst consensus Fair Value of US$204.32.

Fair Value: US$156.00

Implied premium to this Fair Value vs the recent price of about US$159.03: 1.9%

Revenue growth assumption: 4.5% a year

• Assumes slower benefits from AI tools, landfill gas projects and internalization, which keeps revenue, EBITDA and free cash flow closer to current levels for longer.
• Builds in only modest margin expansion, with some of the easier cost and retention gains already captured and future improvements expected to be incremental.
• Anchors on a Fair Value of US$156.00 based on more cautious revenue, earnings and P/E assumptions, while still recognising upside if AI, RNG projects and New York City waste zones deliver stronger results than this scenario allows for.

If you want to see how your own view lines up with these scenarios, have a look at the full Community Narratives and the underlying assumptions that sit behind each Fair Value. See what the community is saying about Waste Connections

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.