How is the current valuation and debt, compared to its competitors ?
Could you also explain the recent secondary offering by some of its institutional share holders and the shares buyback by the Co.
Although, stock dropped on Friday, alongside the market, but do you consider the Co to be a decent hedge during uncertain tariff times ?
What will 5i rating for the Co, if you were to provide one ?
Thank You
GFL trades at a fairly high forward P/E of 64X, which is at a significant premium to its US peers (who mostly trade in the 25X to 35X range). Its net debt/EBITDA is also elevated at 5.0X, compared to peers around 2X to 3X. The stock has fallen in recent weeks, but its long-term trend remains up and to the right, and while we could see further declines in the near-term, we view it as a high-quality long-term name.
Recently, GFL announced an upsized secondary offering from OTPP, and a few other institutions. GFL did not receive any proceeds from this offering. GFL also agreed to repurchase and cancel about 7 million of the total ~19 million shares that were sold by institutions. We view it as a positive signal and the company has decent cash flows to support this. It is difficult to provide a rating at this time, but given its debt levels, recency to the public markets, offset by solid sales and margin growth, we would likely rank it in the 'B' range. Although, the report cards and ratings take in much more quantitative data on deciding an official rating, and as a result this is subject to change.