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GFL Environmental (TSE:GFL)
TSX:GFL
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GFL Environmental
(TSX:GFL)69Neutral
Positive Factors
M&A Growth Strategy
Accelerating M&A growth and peer-leading margin improvement will force a re-rating of the company's valuation.
Operational Improvement
The presentations and discussions with management reinforced the growth momentum in the business, and its focus on operational improvement was encouraging.
Negative Factors
Valuation Concerns
Valuation keeps analysts on the sidelines, suggesting that optimism is largely captured by the current valuation.
GFL Environmental (GFL) vs. S&P 500 (SPY)
Market Cap
$25.94B
Dividend Yield0.12%
Average Volume (3M)316.40K
Price to Earnings (P/E)―
Beta (1Y)0.33
Revenue Growth4.61%
EPS Growth-2848.30%
CountryCA
Employees20,000
SectorIndustrials
Sector Strength66
IndustryWaste Management
Share Statistics
EPS (TTM)-1.90
Shares Outstanding381,570,470
10 Day Avg. Volume361,257
30 Day Avg. Volume316,402
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.42
Price to Cash Flow (P/CF)9.60
P/FCF Ratio17.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$77.73Price Target Upside17.86% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
GFL Environmental Business Overview & Revenue Model
Company DescriptionGFL Environmental Holdings Inc is an environmental services company. Its offerings include non-hazardous solid waste management, infrastructure, soil remediation, and liquid waste management services. Its solid waste management business line includes the collection, transportation, transfer, recycling and disposal of non-hazardous solid waste. Its infrastructure and soil remediation business line provide remediation of contaminated soils as well as complementary services, including civil, demolition, excavation and shoring services.
How the Company Makes MoneyGFL Environmental makes money through multiple revenue streams primarily derived from its comprehensive waste management services. The company generates revenue by collecting fees for waste collection and disposal services from residential, commercial, and industrial clients. A significant portion of its income comes from long-term contracts with municipalities and businesses for regular waste collection and management services. GFL also earns revenue from recycling operations by processing recyclable materials and selling them to manufacturers. Additionally, the company offers specialized services like soil remediation and infrastructure development, which contribute to its earnings. Strategic acquisitions and partnerships have helped GFL expand its market presence and enhance its service offerings, further driving revenue growth.
GFL Environmental Financial Statement Overview
Summary
GFL Environmental shows strong revenue growth and improving cash flow from operations. However, challenges with profitability and high leverage, reflected in negative net income and a significant debt-to-equity ratio, pose risks to financial stability.Income Statement
GFL Environmental has demonstrated consistent revenue growth, increasing from $3.35 billion in 2019 to $7.86 billion in 2024, reflecting a strong upward trajectory in top-line performance. However, despite revenue growth, the company has struggled with profitability, consistently reporting negative net income, with a notable loss of $722.7 million in 2024. Gross profit margins improved over time, but the inability to generate positive EBIT and net income margins remains a concern, impacting overall profitability.65
Positive
Balance Sheet
The balance sheet reflects substantial leverage, with a debt-to-equity ratio of 1.51 in 2024, indicating significant reliance on debt financing. Stockholders' equity has improved over the years, reaching $6.98 billion in 2024, but high total debt levels at $10.55 billion present financial risk. The equity ratio of 32.9% suggests a moderate level of equity financing, but the high debt burden poses challenges to financial stability.58
Neutral
Cash Flow
Cash flow from operations has been strong, with significant growth to $1.54 billion in 2024. The free cash flow has turned positive in 2024 at $347.2 million, compared to a negative figure in 2023, indicating an improvement in cash management. The operating cash flow to net income ratio is high due to negative net income, highlighting efficient cash conversion despite profitability issues. However, the historical volatility in free cash flow underscores potential cash flow management risks.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 7.86B | 7.52B | 6.76B | 5.53B | 4.20B | Gross Profit |
| 1.49B | 1.27B | 797.60M | 527.60M | 190.10M | EBIT |
| 0.00 | 389.20M | 87.90M | -64.30M | -320.30M | EBITDA |
| 1.20B | 2.33B | 1.63B | 1.09B | 303.80M | Net Income Common Stockholders |
| -722.70M | 45.40M | -183.20M | -606.80M | -994.90M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 133.80M | 135.70M | 82.10M | 190.40M | 27.20M | Total Assets |
| 21.21B | 20.67B | 19.77B | 18.37B | 15.73B | Total Debt |
| 10.55B | 9.29B | 9.65B | 8.29B | 7.74B | Net Debt |
| 10.42B | 9.15B | 9.56B | 8.10B | 7.72B | Total Liabilities |
| 13.99B | 13.29B | 13.72B | 12.60B | 10.05B | Stockholders Equity |
| 6.98B | 7.18B | 6.04B | 5.78B | 5.68B |
| Cash Flow | Free Cash Flow | |||
| 347.20M | -74.70M | 316.20M | 250.70M | 73.90M | Operating Cash Flow |
| 1.54B | 980.40M | 1.10B | 897.90M | 502.20M | Investing Cash Flow |
| -1.68B | -310.40M | -1.73B | -2.69B | -4.35B | Financing Cash Flow |
| 163.20M | -602.80M | 569.00M | 1.96B | 3.34B |
GFL Environmental Technical Analysis
Positive
65.95
Price Trends
63.75
Positive
62.55
Positive
57.61
Positive
Market Momentum
0.50
Negative
54.67
Neutral
76.26
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:GFL, the sentiment is Positive. The current price of 65.95 is above the 20-day moving average (MA) of 65.24, above the 50-day MA of 63.75, and above the 200-day MA of 57.61, indicating a bullish trend. The MACD of 0.50 indicates Negative momentum. The RSI at 54.67 is Neutral, neither overbought nor oversold. The STOCH value of 76.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:GFL.
GFL Environmental Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Performance Comparison
TSE:GFL
GFL Environmental
65.95
19.02
40.52%
BLDP
Ballard Power Systems
1.26
-1.74
-58.00%
CNI
Canadian National Railway
101.07
-25.68
-20.26%
RBA
RB Global
101.37
26.93
36.18%
WCN
Waste Connections
188.35
21.68
13.01%
TSE:NFI
NFI Group Inc
11.16
-0.52
-4.45%
GFL Environmental Earnings Call Summary
Earnings Call Date: Feb 24, 2025 | % Change Since: 0.53% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
GFL demonstrated strong financial performance with significant margin expansion and promising growth guidance for 2025. While there were challenges such as declines in Environmental Services revenue and headwinds from commodity and fuel prices, the company's strategic initiatives and enhanced balance sheet position it well for future growth.Highlights
Strong Financial Performance
GFL reported consolidated revenue for the quarter of $1.98.6 billion, ahead of guidance, with fourth quarter solid waste organic growth accelerating to 7%. Adjusted EBITDA margins were 29.1%, 300 basis points higher than the prior year.
Margin Expansion and Guidance
For the second consecutive quarter, GFL saw 300 basis points of margin expansion. The company is guiding industry-leading organic growth across all financial metrics in 2025, with expectations of 100 basis points of adjusted EBITDA margin expansion.
Strategic Initiatives
The sale of the ES business is expected to close on March 1, providing GFL with an enhanced balance sheet and capital deployment options. The company plans to use proceeds to repay $3.75 billion of long-term debt and pursue share buybacks.
M&A Activity and Growth Investments
GFL closed 11 transactions in 2024 and plans to deploy $325 million of incremental growth capital in 2025. The company maintains a robust M&A pipeline and expects to re-ignite its M&A strategies.
Lowlights
Environmental Services Revenue Decline
Environmental Services revenue was down 2.2% compared to the prior year, impacted by lower used motor oil pricing, lower soil volumes, and tough comparisons from large-scale event-driven revenue in the prior year.
Commodity and Fuel Price Headwinds
Decreases in energy prices reduced fourth quarter revenues from fuel surcharges, and lower commodity prices were a headwind to revenues.
Canadian Postal Strike Impact
Q4 cash collections were negatively impacted by a Canadian postal strike in December, creating a headwind to working capital in the quarter.
Leverage Increase Due to FX
The significant strengthening of the U.S. dollar versus the Canadian dollar in Q4 increased net leverage to 4.06 due to the translational impact of revaluing the year-end debt stack.
Company Guidance
During the GFL Fourth Quarter 2024 earnings call, the company provided guidance for 2025 with several key metrics. GFL anticipates a top-line growth of 6% to 7%, targeting revenues between $6.5 billion and $6.55 billion. The guidance includes industry-leading organic growth across all financial metrics, with a focus on achieving a 100 basis point expansion in adjusted EBITDA margins to 29.7%. The company also expects to deploy $325 million in incremental growth capital in 2025, primarily for EPR contracts, and anticipates adjusted free cash flow of $750 million. M&A activity is projected to increase post-sale of the Environmental Services (ES) business, with a planned $2.25 billion share repurchase program to reduce the public float. GFL plans to maintain leverage around three times net debt to adjusted EBITDA, with a focus on achieving an investment-grade credit rating.GFL Environmental Corporate Events
M&A TransactionsStock BuybackBusiness Operations and Strategy
GFL Environmental Sells Environmental Services Business for $8 Billion
Positive
Mar 3, 2025
GFL Environmental Inc. has completed the sale of its Environmental Services business for $8 billion, retaining a $1.7 billion equity interest. The company plans to use up to $3.75 billion of the proceeds to repay debt, with $2.25 billion potentially allocated for share repurchases, subject to market conditions, and the remainder for transaction fees and general corporate purposes. This transaction is expected to significantly impact GFL’s financial strategy, potentially improving its debt position and shareholder value.
Business Operations and StrategyFinancial Disclosures
GFL Environmental Announces 2024 Earnings Release and 2025 Investor Day
Neutral
Jan 22, 2025
GFL Environmental Inc. has scheduled its full year 2024 earnings release for February 24, 2025, with an investor conference call to follow the next day. Additionally, the company will host its 2025 Investor Day on February 27 at the New York Stock Exchange, where senior management will discuss key strategies and financial objectives, potentially impacting stakeholder perspectives on growth and sustainability efforts.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.