Covanta Holding Corporation (NYSE: CVA) and Waste Connections (NYSE:WCN) are both oils/energy companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Risk and Volatility

Covanta Holding Corporation has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500. Comparatively, Waste Connections has a beta of 0.23, indicating that its share price is 77% less volatile than the S&P 500.

Valuation and Earnings

This table compares Covanta Holding Corporation and Waste Connections’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Covanta Holding Corporation $1.71 billion 1.08 $296.00 million ($0.19) -74.73
Waste Connections $4.40 billion 3.93 $1.37 billion $1.18 55.52

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Covanta Holding Corporation and Waste Connections, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Covanta Holding Corporation 1 0 6 0 2.71
Waste Connections 0 1 8 1 3.00

Covanta Holding Corporation currently has a consensus target price of $17.07, indicating a potential upside of 20.22%. Waste Connections has a consensus target price of $71.33, indicating a potential upside of 8.57%. Given Covanta Holding Corporation’s higher possible upside, research analysts plainly believe Covanta Holding Corporation is more favorable than Waste Connections.

Dividends

Covanta Holding Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 7.0%. Waste Connections pays an annual dividend of $0.38 per share and has a dividend yield of 0.6%. Covanta Holding Corporation pays out -526.3% of its earnings in the form of a dividend. Waste Connections pays out 32.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Waste Connections has raised its dividend for 7 consecutive years. Covanta Holding Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

96.2% of Covanta Holding Corporation shares are held by institutional investors. Comparatively, 82.8% of Waste Connections shares are held by institutional investors. 11.6% of Covanta Holding Corporation shares are held by company insiders. Comparatively, 0.7% of Waste Connections shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Covanta Holding Corporation and Waste Connections’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Covanta Holding Corporation -1.41% -9.81% -0.96%
Waste Connections 7.11% 9.19% 4.59%

Summary

Waste Connections beats Covanta Holding Corporation on 11 of the 17 factors compared between the two stocks.

Covanta Holding Corporation Company Profile

Covanta Holding Corporation is a holding company. The Company, through its subsidiaries, owns and operates infrastructure for the conversion of waste to energy, as well as other waste disposal and renewable energy production businesses. The Company operates through North America segment, which consists of waste and energy services operations located primarily in the United States and Canada. Outside of North America, the Company is constructing an energy-from-waste (EfW) facility in Dublin, Ireland. The Company holds interests in an EfW facility in Italy and an infrastructure business in China, which is engaged in EfW operations. These EfW projects generate revenue from three main sources: fees charged for operating projects or processing waste received; the sale of electricity and/or steam, and the sale of ferrous and non-ferrous metals that are recovered from the waste stream as part of the EfW process.

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.

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