Q: Considering a switch from WCN waste connections to GFL as WCN has run up significantly; comments please.
5i Research Answer:
GFL has typically run a much more leveraged balanced sheet and and more aggressive strategy than WCN. GFL has a net debt/EBITDA of 4.9x, while that number for WCN is 2.9x. GFL has reinvested cash flow and borrowed more to pay for capital expenditure and acquisitions, while WCN also reinvested the majority of its cash flow into growth projects, but pays a growing dividends and repurchases shares occasionally. GFL is trading at 15x EV/EBITDA, while WCN’s multiple is 21x Overall, GFL is more aggressive in terms of leverage and growth projects. GFL could do better than WCN IF the company keeps executing well, otherwise it has a much higher risk profile than WCN.