Waste management services provider Waste Connections, Inc. WCN recently declared that it has acquired Groot Industries, Inc. for an undisclosed amount. The transaction will augment the regional presence of the company and boost top-line growth with a complementary operating portfolio.

Since its inception in 1914, Groot has evolved as the largest privately-owned solid waste services firm in Illinois with total annual revenue of approximately $200 million. It boasts an operating portfolio of six collection centers, six transfer stations and two recycling facilities that enable it to serve approximately 300,000 customers, primarily in northern Illinois.

The acquisition will facilitate Waste Connections to better serve customers in these markets, while increasing potential internalization benefits of disposal volumes into its existing landfills and expanding scope to explore additional growth opportunities.

Waste Connections had a dream run in 2016 as it outperformed the Zacks categorized Waste Removal Services industry with an average return of 52.1% compared with 18.3% for the latter.

In addition, with long-term earnings growth expectation of 21.3%, this Zacks Rank #3 (Hold) stock looks poised for a steady uptrend. Earnings estimates for 2016 increased from $2.42 to $2.51 per share in the last 90 days, signifying positive investor confidence.

Waste Connections and rival Progressive Waste Solutions Ltd merged in Jun 2016 to create an industry leader with enhanced scale and a stronger financial profile. With complementary footprints, the combined company has pro forma revenue of approximately $4.1 billion. It operates an integrated network of solid waste operations across North America.

The combined company will benefit from a diverse revenue base and has strategic assets uniquely positioned for continued growth. In addition, it is expected to generate approximately $50 million in annualized SG&A (selling, general and administrative) cost savings within the first 12 months of closing, with operational and safety-related improvements and market rationalization contributing additional upside, over the long term.

We expect Waste Connections to continue outperforming the industry with solid fundamentals. Some better-ranked stocks in the industry include Waste Management, Inc. WM, Advanced Disposal Services, Inc. ADSW and Aqua Metals, Inc. AQMS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Waste Management has a long-term earnings growth expectation of 9.6% and has beaten estimates in all the trailing four quarters for an average earnings surprise of 4.8%.

Advanced Disposal Services has comfortably beaten estimates in the last reported quarter with an earnings surprise of 50%.

Aqua Metals has beaten estimates once in the trailing four quarters for an average negative earnings surprise of 18.3%.

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