Waste Connections reports Q2 results today with the defensive options tone from earlier in the week fading, but analyst conviction softening just ahead of the release.
Options positioning has eased from its peak but remains slightly more cautious than usual. The put/call ratio has pulled back to 1.16 from 1.31 on July 17, yet still runs above its 20-day average of 1.03 — roughly 0.9 standard deviations elevated. Hedging demand built sharply in mid-July and has only partially unwound heading into the print. The stock closed at $167.90, down about 0.3% on Tuesday and off 1.3% on the week, giving back a portion of the nearly 10% one-month rally noted in last week's preview. Sector peers moved similarly: RSG and WM both dropped over 2% on Tuesday, suggesting the pullback is sector-wide rather than WCN-specific.
The more pointed development heading into the print is a near-term split in analyst conviction. JP Morgan's Tami Zakaria, who raised her target to $210 after last quarter's beat, trimmed it back to $195 on July 13 — before today's results — while maintaining Overweight. Citigroup moved the other direction, nudging its target to $182 from $180 on a Neutral rating. The mean consensus target is $203, about 21% above the current price, suggesting the Street's structural view remains constructive. But the pre-earnings target cut from JPM points to some caution around near-term delivery. The bull case centres on pricing power — 6.6% pricing growth in Q2 offsetting a 2.6% volume decline, with underlying solid waste margins expanding 70 basis points year-over-year. Bears focus on persistent volume erosion, commodity headwinds in recycled materials and RINs worth roughly $30 million of pressure in the second half, and a stretched EV/EBITDA around 15x.
One data point that changed the picture since last week's preview: the CEO bought. Ronald Mittelstaedt purchased 50,000 shares on May 12 at roughly $152, a transaction worth $7.6 million. Against a backdrop of smaller executive sales from the COO and General Counsel in early June, that founder-level buy at a price well below the current level is the most significant insider signal in the recent record and adds a layer of longer-term confidence that the shorter-term positioning data does not fully capture.
Today's print will test whether WCN's pricing-led margin story can hold up against mounting volume pressure and commodity softness — and whether the guidance for the second half is strong enough to justify the multiple after a stock that has already recovered sharply from its spring lows.
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