Waste Services: 2Q Preview – Raising Est. and Target Prices; Sizing Potential Guidance Revisions

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Waste Services: 2Q Preview – Raising Est. and Target Prices; Sizing Potential Guidance Revisions

Waste Services

09 July 2026 Citi Research

Raising est. on commodity tailwinds, bolt-on M&A – For the first time this year,

mgmt teams are likely to formally revisit ’26 guides and we see upside risk due to

higher prices for recycled commodities and incremental M&A completed in 1H;

renewable energy prices and E&P could bring further upside for some producers.

We also see potential upside to the net spread as wage inflation remains benign

(<1%) but CPI could approach 4% Y/Y, dragging yield higher as well. Despite these

potential tailwinds, the group is trading in-line with 5-yr avg. valuation on ’27

EBITDA at 13.5x. WCN (-1.6x) & GFL (-0.9x) are currently trading below their 5-yr

averages, WM (-0.3x) & RSG (+0.2%) are roughly in-line and CLH (+2.9x) is above.

We’re moving RSG to our top pick (previously WM) as we expect EBITDA guidance

could be raised on the 2Q call (recycled commodities, M&A) and we expect mgmt

remains confident in a 2H inflection for ES, particularly given recent momentum

from rising US rig counts. Shares screen as the least crowded in the group, in the

11th percentile out of ~3,000 US stocks, comparable to WM (15th) and GFL (23rd), but

well below CLH (95th) and WCN (76th). The group continues to be a somewhat

crowded short with avg. 79th percentile crowding. In our recent conversations,

sentiment feels lowest towards GFL due to a mixed reception to the Secure

acquisition, while interest in WCN appears somewhat higher due to recent trough

valuation (13.2x in early June, per FactSet) and potential E&P tailwinds.

Figure 1. Citi '26 EBITDA Est. Revisions Figure 2. Citi Est. Changes to 2026 EBITDA Outlooks

Citi Citi Est. New Citi Est.

'26 Guide

Old New Cons.