Water Technologies And Waste Treatment Will Reshape Global Standards

Key Takeaways

• Rising global environmental regulations and demand for advanced water and waste solutions are driving sustained growth, strong order bookings, and improved recurring earnings for Veolia.
  
• Strategic M&A synergies, international diversification, and a shift toward high-value technology services are enhancing margins and strengthening Veolia's long-term growth potential.
  
• Heavy reliance on efficiency gains, challenging acquisitions, and slowing growth in mature and emerging markets threaten future profitability and margin expansion.

Catalysts

Designs and provides water, waste, and energy management solutions.

• Strong multi-year growth in Water Technologies and Hazardous Waste segments is being driven by rising health, resilience, and environmental compliance requirements worldwide, as reflected in Veolia's record order book and robust +8.9% growth in booster activities; this is likely to support sustained revenue and EBITDA growth, underpinned by tightening global regulations on pollution and water safety.
  
• Expanding need for climate adaptation infrastructure-such as water reuse, decarbonized energy, and sustainable waste treatment-continues to fuel demand for Veolia's advanced solutions, with new contracts, high renewal rates (>90%), and long-term agreements (average 11 years); this should drive recurring revenue streams and improved earnings visibility.
  
• Synergies from recent strategic M&A (e.g., Suez and CDPQ 30% Water Technologies stake) are expected to contribute €90 million in annual cost benefits by 2027, with further efficiency gains embedded in operations; this supports steady net margin expansion and boosts free cash flow generation at the group level.
  
• Ongoing proactive international diversification, especially growth in higher-margin emerging markets (Asia-Pacific, Middle East, LatAm), is reducing Veolia's dependence on mature European markets, anchoring new revenue streams and enhancing top-line growth potential.
  
• Record bookings and a healthy sales pipeline in technology-driven, higher-value service areas (e.g., PFAS treatment, resource recovery, digital water solutions) are positioning Veolia to benefit disproportionately from stricter environmental regulation and technological adoption in the sector; this is likely to accelerate EPS growth and improve Veolia's return on capital employed.

Veolia Environnement Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Veolia Environnement's revenue will grow by 4.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.7% today to 3.6% in 3 years time.
• Analysts expect earnings to reach €1.8 billion (and earnings per share of €2.47) by about August 2028, up from €1.2 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €2.1 billion in earnings, and the most bearish expecting €1.6 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.6x on those 2028 earnings, down from 17.8x today. This future PE is greater than the current PE for the GB Integrated Utilities industry at 13.4x.
• Analysts expect the number of shares outstanding to decline by 5.77% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.98%, as per the Simply Wall St company report.

Veolia Environnement Future Earnings Per Share Growth

Risks

• Veolia's reliance on recurring efficiency gains and synergies (e.g., from Suez acquisition) for margin expansion could face diminishing returns over time, limiting future EBITDA and net income growth if operational improvement opportunities become exhausted.
  
• Ongoing integration of recent large-scale acquisitions and continued high levels of M&A (€2.2 billion in H1 2025 alone) could increase operational complexity and the risk of cost overruns, negatively impacting net margins and free cash flow if synergies are not fully realized.
  
• Flat tariff indexation in key markets such as France Municipal Water, combined with inflationary and cost pressures, may threaten margin stability or result in margin compression if cost containment measures prove insufficient-directly impacting profitability.
  
• Revenue growth in France Municipal Waste is negative year-on-year (–4.8%), indicating potential structural or secular decline in mature markets; if this trend persists or spreads geographically, it could offset gains in international markets and constrain top-line growth.
  
• Price pressure in China's hazardous waste segment and overall exposure to volatile or underperforming emerging markets may continue to weigh on revenue and margins, especially if economic rebalancing is slow or regulatory risks in these regions materialize-impacting both revenue growth and net earnings.

Valuation

• The analysts have a consensus price target of €35.233 for Veolia Environnement 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 €45.3, and the most bearish reporting a price target of just €25.3.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €51.5 billion, earnings will come to €1.8 billion, and it would be trading on a PE ratio of 13.6x, assuming you use a discount rate of 6.0%.
• Given the current share price of €29.88, the analyst price target of €35.23 is 15.2% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.