Analyzing Waste Connections (WCN) and Vertex Energy (VTNR)

Waste Connections (NYSE: WCN) and Vertex Energy (NASDAQ:VTNR) are both business services companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, institutional ownership, earnings and profitability.

Institutional and Insider Ownership

61.2% of Waste Connections shares are held by institutional investors. Comparatively, 23.2% of Vertex Energy shares are held by institutional investors. 0.7% of Waste Connections shares are held by company insiders. Comparatively, 31.0% of Vertex Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Waste Connections has a beta of 0.23, meaning that its share price is 77% less volatile than the S&P 500. Comparatively, Vertex Energy has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Dividends

Waste Connections pays an annual dividend of $0.38 per share and has a dividend yield of 0.6%. Vertex Energy does not pay a dividend. Waste Connections pays out 32.1% of its earnings in the form of a dividend. Waste Connections has increased its dividend for 7 consecutive years.

Analyst Ratings

This is a summary of current ratings and price targets for Waste Connections and Vertex Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waste Connections	0	1	9	1	3.00
Vertex Energy	0	1	0	0	2.00

Waste Connections currently has a consensus price target of $70.24, indicating a potential upside of 10.41%. Vertex Energy has a consensus price target of $1.00, indicating a potential upside of 5.26%. Given Waste Connections’ stronger consensus rating and higher probable upside, analysts clearly believe Waste Connections is more favorable than Vertex Energy.

Valuation & Earnings

This table compares Waste Connections and Vertex Energy’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Waste Connections	$4.40 billion	3.81	$1.37 billion	$1.18	53.76
Vertex Energy	$131.20 million	0.24	$447,203.00	($0.42)	-2.26

Waste Connections has higher revenue and earnings than Vertex Energy. Vertex Energy is trading at a lower price-to-earnings ratio than Waste Connections, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Waste Connections and Vertex Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Waste Connections	7.11%	9.19%	4.59%
Vertex Energy	-6.49%	-23.10%	-10.13%

Summary

Waste Connections beats Vertex Energy on 14 of the 17 factors compared between the two stocks.

Waste Connections Company Profile

Waste Connections, Inc. is a solid waste services company in North America. The Company provides waste collection, transfer, disposal and recycling services in markets in the United States and Canada. The Company operates through six segments: Southern segment, Western segment, Eastern segment, Canada segment, Central segment and E&P segment. Through its R360 Environmental Solutions subsidiary, it also provides non-hazardous exploration and production, or E&P, waste treatment, recovery and disposal services in various natural resource producing areas in the United States. It also provides intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest through a network of intermodal facilities. As of December 31, 2016, it served residential, commercial, industrial and exploration and production (E&P) customers in 40 states and the District of Columbia in the United States and five provinces in Canada.

Vertex Energy Company Profile

Vertex Energy, Inc. is an environmental services company that recycles industrial waste streams and off-specification commercial chemical products. The Company focuses on recycling used motor oil and other petroleum by-products. The Company’s segments include the Black Oil, Refining and Marketing, and Recovery divisions. The Company’s product categories include Used Motor Oil, Fuel Oil, pyrolysis gasoline (Pygas), Gasoline Blendstock and Base Oil. The Black Oil division is engaged in operations across the used motor oil recycling value chain, including collection, aggregation, transportation, storage, refinement and sales of aggregated feedstock and re-refined products to end users. The Refining and Marketing division is engaged in the aggregation of feedstock, re-refining it into end products, and selling these products to customers. The Recovery division is a provider of generator solutions for the recovery and management of hydrocarbon streams.