Waste Connections entered Q3 earnings with its stock already on a strong run over the past month. The latest report for the quarter to September 2026 forced investors to recalibrate in real time. The stock jumped 9.9% to US$184.88 on Thursday after the waste hauler posted US$2.64b in revenue and basic earnings per share of about US$1.43.
For a business often treated as a steady compounder, that kind of one day move is rare. The real story sits in the profit engine, where margin expansion and cash generation are starting to do the heavy lifting behind the share price reaction.
Impressed by Waste Connections' margin story but want more options with strong cash engines behind them too? Compare this move with a wider field of resilient operators using our list of solid balance sheet and fundamentals stocks (25 results)
Q3 2026 Earnings Summary
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Revenue (Q3 2026 vs. Q3 2025):US$2,638.1m vs. US$2,458.4m (up about 7.3%)
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Net Income (Excl. Extra Items, Q3 2026 vs. Q3 2025):US$359.2m vs. US$286.3m (up about 25.5%)
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Basic EPS (Q3 2026 vs. Q3 2025):US$1.43 vs. US$1.11 (up about 28.3%)
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Net Profit Margin (Trailing 12 Months vs. Prior Year):11.4% vs. 6.7% (margin higher year over year)
Ask Charlie what Waste Connections' RNG build means for 2027 margins .
Evaluating Whether Waste Connections' Bull Case Is Showing Up
The bullish view hinges on Waste Connections turning AI projects into better pricing and retention rather than just a tech story.
"Expanded use of AI powered tools in pricing, customer engagement and routing, with seven initiatives scheduled through 2027 and early results already supporting core price retention and lower churn, points to potential uplift in revenue quality and operating efficiency that can support EBITDA margins and earnings."
Q3 results give that claim some backing. Core price of 5.5% with volumes only slightly lower, plus about 50 bps of underlying margin expansion, point to healthier revenue mix and tighter operations even with a fuel headwind still in play.
One Narrative has put a figure on that disagreement. → See the Narrative with its higher Fair Value, assumptions and all .
Waste Connections Bear Case: Costs And Projects Under The Microscope
Bears argue Waste Connections' tech push could stall where it matters most, inside routing and day to day operations.
"Although AI driven pricing tools and digital platforms are already helping improve customer retention and pricing effectiveness, further rollout across routing and operations could be slower or more complex than planned. This may limit the pace of revenue growth and delay expected benefits to EBITDA margins and earnings."
Q3 tells a mixed story. Core price of 5.5% with only slightly softer volumes and about 50 bps of underlying margin expansion indicate no visible drag from AI rollout. At the same time, management is not including incremental AI margin gains in 2027 guidance and points to more material benefits starting in 2028, which aligns with the warning about slower operational rollout.
Hunt For Quiet Margin Stories
Waste Connections recently showed how sentiment can shift when margins and cash generation align. The real opportunity is identifying stocks that could be undervalued before stronger execution is fully reflected in market expectations.
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Company 1 - 35% below our estimate - focuses on consolidating production sites and prioritizing higher-margin aftermarket projects linked to long-cycle power infrastructure.
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Company 2 - 28% below our estimate - positions networking hardware and software where rising data volumes must be transported, interconnected, secured and orchestrated across critical systems.
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Company 3 - 29% below our estimate - targets sophisticated electronics programs for regulated customers once they commit to multi-year outsourcing of advanced product platforms.
Three companies from the same screener. Open every one of the 30 undervalued companies on it →
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.
Companies discussed in this article include WCN .
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