Why Waste Connections' Shares Jumped

Updated

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Waste Connections (NYS: WCN) rose 10% today after announcing an acquisition.

So what: The company will buy R360 Environmental Solutions for $1.3 billion in cash. R360 adds exposure to waste services in oil-rich drilling areas like the Bakken and Eagle Ford Basins.


Now what: The deal is expected to be accretive, or add to earnings, but it will also add to the company's risk. Waste Connections doesn't have the cash to make the purchase on hand, so it will have to go to either the debt or equity markets to complete the deal. R360 has revenue of only about $300 million, so it's an expensive deal, and with the added risk the balance sheet poses, I would be a seller today.

Interested in more info on Waste Connections? Add it to your Watchlist byclicking here.

The article Why Waste Connections' Shares Jumped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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