Waste Connections, Inc. (WCN) stock intrinsic value fair value estimate & owner earnings analysis

Waste Connections is the third-largest solid waste company in North America. It collects, transfers and disposes of non-hazardous waste, recycles, and generates renewable fuels in 46 U.S. states and six Canadian provinces. It also treats and disposes of oilfield waste and runs intermodal cargo services in the Pacific Northwest. Revenue was $9.47 billion in 2025. Canada provided about 14% of it and five U.S. regional segments provided the rest. The business model is to own the landfill and the trucks that feed it, often in secondary and rural markets or under exclusive contracts. Landfill permits are very hard to get. The company estimates its landfills have about 31 years of permitted life left, or about 34 years if six expansions it considers probable are approved. How we measure earnings. We start with operating cash flow. We remove working-capital swings and stock-based pay, and we deduct the capital spending needed to keep the business running. On that basis, owner earnings rose from $3.09 per share in 2018 to $4.44 in 2023, 2024 and 2025. We use $4.44, the median of 2021-2025, as the starting level. One judgement mattered a lot. Chiquita Canyon, a landfill in Los Angeles County, has had an elevated-temperature event since May 2023. The company stopped accepting waste there on December 31, 2024, and recorded a $480.8 million closure-cost charge and a $116.1 million write-down. Those charges were non-cash. We counted the cash actually spent on closure as a real operating cost, even though some of it is unusual. That spending was $39 million in 2023, $248 million in 2024, $306 million in 2025 and $137 million in the first half of 2026. That spending is why owner earnings have not grown since 2023, even though prices rose. The company booked another $173.5 million of new closure obligations in the first half of 2026, so we do not assume the spending ends soon. Growth came mostly from acquisitions. From 2017 through 2025 the company spent about $9.1 billion buying other businesses. That is roughly all the owner earnings it produced over the same period, about $8.8 billion. Long-term debt rose from $3.9 billion to $8.8 billion. Our owner-earnings figure does not deduct acquisition spending, so we do not count growth that comes from acquisitions either. Only growth from the existing business counts. Base case, $108.07 per share. Owner earnings stay flat at $4.44 in 2026. In the first half of the year capital spending rose to $599 million from $498 million, and Chiquita cash costs continued. After that, earnings grow 3% a year through 2035 to about $5.79. That rests on the pricing record: in 2025 the company raised core prices by $537 million, more than offsetting $238 million of lost volume, while costs at existing operations rose only $96 million. From 2036 growth slows to 2% until the average permitted landfill life runs out, about 34 years from now, and earnings are then held flat. Waste collection is an essential service, and the company is pursuing six landfill expansions it considers probable. Bear case, $66.72 per share. Owner earnings stay flat for five years. Volume keeps falling, as it did in 2025. Interest cost keeps rising: cash interest paid went from $177 million in 2022 to $308 million in 2025 on $8.8 billion of debt. Chiquita costs persist. Growth is then 1.5% a year to 2035 and 1% to year 30. No value is counted after that, when today's permitted landfill space runs out. The regional air-quality district has issued about 410 notices of violation at Chiquita. The California Department of Toxic Substances Control issued an endangerment order in April 2025 and a final finding of noncompliance on January 26, 2026, and numerous civil lawsuits are pending. The company says it cannot estimate the penalties but that they could be substantial. We could not put a number on that exposure, so it is not in any case, and it is the main thing that could push value below the bear case. Bull case, $152.37 per share. Chiquita closure spending falls back toward pre-2024 levels by 2029, adding about $0.85 per share. Pricing continues to beat cost inflation, so earnings grow 4.5% a year through 2035 and 2.5% a year for the next 30 years, then hold flat. Our value estimate uses a flat 6% discount rate. We do not subtract debt, because owner earnings are already after interest. Leverage shows up in the bear case instead. The company also bought back $505.5 million of shares in 2025 and $614.5 million in the first half of 2026, partly funded with debt. We give no credit for buybacks. The value is most exposed to two things: how long and how large Chiquita costs and penalties turn out to be, and whether price increases keep outrunning cost inflation and volume losses. The business is stable and essential, but the unquantified Chiquita liabilities and the debt call for a margin of safety of about one-third below the base case. That puts the margin-of-safety price at $73.