Should You Invest in GFL Environmental?

PHOTO CREDIT: GFL Environmental

OVERVIEW

GFL Environmental Incorporation is a company based in Canada. The company offers products and services related to solid waste management, liquid waste management, and soil and infrastructure services. The company collects, transports, and stores/processes multiple kinds of waste. The company remediated soil and demolition services. The company was founded in 2007.

Why You Should?

  1. GFL Environmental operates an extremely safe, resilient, and recession-proof investment. Solid and liquid waste management services always have some type of demand in order to maintain a high quality of life. The company makes the bulk of its revenue from these sectors and this sector will always have a good stream of revenue.
  2. After the economy bottomed out in March, the economy is starting to slowly gain strength as cities move through reopening plans. This creates higher volumes of commercial and industrial solid and liquid waste, something that will improve the company’s volumes. This will benefit both the company and its investor base.
  3. GFL Environmental offers everything from solid and liquid waste to soil remediation and demolition services. This wide range of products and services will help the company get through a dip in demand for one of their sectors. For example, lower demolition demand does not mean that the company will see lower demand for its solid and liquid waste management services.
  4. GFL Environmental makes the bulk of its revenue from the services that it offers in Canada, but it is slowly starting to expand its presence in the United States. For example, they bought many of the divested assets through the Waste Management and Advanced Disposal deal. They have bought many other companies in order to grow in each of its sectors as well.
  5. The company has seen rising revenues and lower losses over the past couple of financial years. The company has never posted a profit, but its business is a sustainable one. The company looks to grow in the short term so that it can profit in the future. These better metrics will benefit both the company’s future growth plans as well as its investor base. In the financial year of 2019, the company reported revenues of around 3.35 billion and a loss of around 451 million. Both of these metrics are better than what the company reported in the financial year of 2018 when they had revenues of around 1.85 billion and a loss of around 483 million.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. The COVID-19 Pandemic has drastically cut the demand for industrial and commercial services, including the company’s soil remediation and demolition services. It has also seen higher operating costs due to offering its employees with adequate PPE. The company looks for these impacts to be short to mid-term.
  2. GFL Environmental signs contracts to offer its services to cities and municipalities in which it operates. However, the company still faces competition from private companies like Waste Connections, Waste Management, and Republic Services as well as other publically-run companies. This competition might hurt the company in the future.

MY OPINION

In my opinion, I think that GFL Environmental is a decent long-term investment due to its resilient business, a stronger economy returning, a wide range of products and services, a good growth plan in North America, and rising revenues as well as lower losses. However, impacts from the COVID-19 Pandemic as well as tough competition might hurt the company in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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