GFL Stock Analysis

1. Performance Comparison: Since mid-2023, GFL’s shares have declined by 18%, notably underperforming key waste management companies like RSG, WCN, and WM by a significant margin, ranging from 38% to 43%.
2. Positive Fundamental Outlook: Despite the share price decline, there’s a positive outlook on GFL’s fundamental performance. Concerns about leverage are common, but the company has reiterated its commitment to its financial targets for 2024.
3. Valuation Metrics: GFL’s valuation metrics, such as EV to EBITDA and FCF yield, suggest it’s trading at a notable discount compared to its peers. The company’s EV to forward consensus EBITDA is approximately four points lower than the Big 3 waste companies, trading at around two standard deviations below the mean. Similarly, its forward consensus FCF yield is around 200 bps higher than the Big 3.
4. Historical Valuation Comparison: Comparing GFL’s current valuation discount with historical data from waste companies like CWST during a period of higher leverage ratios (2007-2017), GFL’s discount appears to be overly punitive. Despite CWST’s leverage being between 4x-5x, its average EV to forward consensus EBITDA discount was only around 1.3 points. In contrast, GFL is trading at a four-point discount, suggesting an exaggerated market response.
5. Deleveraging Goals: GFL’s stated goal is to continue deleveraging and achieve an investment-grade rating. Despite concerns over its net debt levels, the company’s commitment to reducing leverage should be considered positively in its valuation.

GFL Stock Forecast & Analysis

1. Analyst Target Price and Rating:
   • According to a forecast from 13 analysts, the average target price for Gfl Environmental Holdings Inc (GFL) over the next 12 months is CAD 51.81.
   • The average analyst rating for GFL is Strong Buy, indicating a favorable outlook among analysts regarding the company’s future performance.
2. Stock Target Advisor Analysis:
   • Stock Target Advisor’s own analysis of GFL suggests a Neutral stance, based on a combination of signals.
   • This analysis incorporates both positive and negative signals, with 7 of each identified.
3. Current Stock Price:
   • As of the last closing, GFL’s stock price was CAD 43.43.
   • Over the past week, GFL’s stock price has experienced a decrease of -2.01%.
   • Looking at the past month, there has been a decline of -4.68% in GFL’s stock price.
   • Over the course of the last year, GFL’s stock price has seen a significant decrease of -13.78%.

Conclusion: Despite concerns over leverage, GFL’s fundamental outlook remains positive. Its current valuation metrics suggest an overly punitive market response, especially when compared to historical valuation trends of similarly leveraged companies. Considering GFL’s commitment to deleveraging, its current valuation may present an attractive opportunity for investors.