GFL Environmental (TSX:GFL) is back in focus after its FY2025 results highlighted strong revenue, higher adjusted EBITDA, expanding free cash flow, and a 10% dividend increase. These developments are prompting fresh questions about what the current share price reflects.
See our latest analysis for GFL Environmental.
At a share price of CA$58.13, GFL Environmental has seen a 13.89% 90 day share price return while the 1 year total shareholder return declined 14.95%. This indicates that shorter term momentum is improving compared with the weaker recent track record.
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After FY2025 results, a 10% dividend rise, and a 13.89% 90 day share price gain, GFL Environmental now trades well below several fair value estimates. Does that gap signal an opportunity or a valuation warning?
Most Popular Narrative: 18% Undervalued
The most followed narrative currently points to a fair value of CA$70.55 for GFL Environmental compared with the last close at CA$58.13. That gap rests on a detailed view of revenue growth, margins, and the value investors might place on future earnings.
The analysts have a consensus price target of CA$70.55 for GFL Environmental based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$90.0, and the most bearish reporting a price target of just CA$55.0.
The fair value hinges on steady revenue expansion, slimmer margins, and a future earnings multiple that is far above what the wider industry currently trades on. This raises the question of which earnings path and valuation hurdle would need to align to support that CA$70.55 figure, and how much confidence analysts place in that outcome.
Result: Fair Value of CA$70.55 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, investors still need to weigh risks such as lower commodity prices and potential revenue pressure from the Environmental Services divestiture when judging the valuation gap for GFL Environmental.
Find out about the key risks to this GFL Environmental narrative.
Another View on GFL Environmental’s Valuation
The analyst narrative points to GFL Environmental trading below fair value, with a CA$70.55 target sitting above the current CA$58.13 share price. The SWS DCF model is even more generous, with an estimate of CA$82.32 per share, which also indicates an undervalued result. That raises a simple question for investors: which set of assumptions feels more realistic?
Look into how the SWS DCF model arrives at its fair value.
Next Steps
With sentiment on GFL Environmental split between opportunity and caution, it may be useful to move quickly and test the assumptions yourself. Start by reviewing the 2 key rewards
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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