Waste Connections (WCN) Stock Jumps After Q3 Earnings Margin Strength

Waste Connections just reminded investors why it has a premium reputation in trash. After releasing Q3 2026 results, the stock jumped 9.9% to US$184.88 in Thursday trading, a sharp move for a waste hauler that usually trades on steadier expectations.

The headline this time is profitability. Q3 revenue came in at US$2.64b with adjusted EBITDA of US$895.8m and a 34% margin, alongside a trailing P/E multiple of 41.1x that already prices in a lot of faith. The gap between that rich valuation and today’s strong margin story is exactly what the market just priced in fast.

Like the profitability story at Waste Connections but uneasy about paying a 41.1x P/E multiple for it? Take a look at our screener of infrastructure and utility style plays with stronger balance sheets and steady fundamentals through the list of solid balance sheet and fundamentals stocks (25 results).

Q3 2026 Earnings Summary

• Revenue (Q3 2026 vs. Q3 2025): US$2,638.1m vs. US$2,458.4m (+7.3%)
• Net Income (Excl. Extra Items, Q3 2026 vs. Q3 2025): US$359.2m vs. US$286.3m (+25.5%)
• Basic EPS (Q3 2026 vs. Q3 2025): US$1.43 vs. US$1.11 (+28.3%)
• Adjusted EBITDA Margin (Q3 2026 vs. Q3 2025): 34.0% vs. 33.8% (+0.2 percentage points)

Earnings grab headlines, but investors who care about what Waste Connections is really worth tend to focus on the cash coming in and out of the business over time instead of a single quarter’s profit line. Based on those cash flows alone, Waste Connections' recent track record in the dataset raises the possibility that the stock could be a dramatic 33% undervalued.

Evaluating Waste Connections’ Execution Milestones

The bullish story leans heavily on Waste Connections turning operational projects into durable earnings power.

"Ongoing roll out of about a dozen renewable natural gas projects, with 6 of 12 facilities still targeted to come online by year end and RNG related CapEx expected to wind down as these assets move into full operation, creates a path for an additional recurring revenue stream while easing capital intensity and supporting adjusted free cash flow and earnings."

Q3 results show this thesis starting to materialize. Landfill gas sales rose 35% and RIN values increased about 10%, helping adjusted EBITDA margin reach 34% and keeping adjusted free cash flow on pace for at least US$1.4b in 2026.

The price and this Narrative do not agree. → Uncover what this Narrative says Waste Connections is actually worth.

Bear Case Check: Are Waste Connections’ Projects Stalling?

Bearish investors worry that Waste Connections’ project slate delivers later and lighter than planned.

"While landfill gas and RNG projects are progressing and one new facility has begun contributing, the majority of the roughly dozen planned facilities are still ramping. Any delays in start up or lower than expected run rates would temper future contributions to revenue and EBITDA, keeping free cash flow closer to current levels for longer."

Q3 shows landfill gas sales up 35% and RIN pricing about 10% higher, with adjusted EBITDA margin at 34% and management confirming at least US$1.4b in 2026 free cash flow. RNG remains early stage though, with 6 of 12 facilities only targeted to be online by year end, so the concern about a slow earnings handoff has not been fully cleared yet.

Hunt For The Next Disconnect

Waste Connections shows how quickly sentiment can shift when execution matches expectations. The real opportunity is in spotting stocks that could be undervalued before a potential re-rating.

• Company 1 - 22% below our estimate - embeds AI into productivity, coding and security tools as enterprises move workloads to its cloud backbone.
• Company 2 - 46% below our estimate - integrates a new regional lender to deepen low cost deposits and lending capacity while maintaining a conservative credit culture.
• Company 3 - 24% below our estimate - extends a former niche coconut beverage into mainstream shelves and private label aisles while managing higher packaging and freight costs.

Those are three of them. See the full list of 30 companies trading below our fair value estimates →

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com