Is Veolia Environnement Still Attractively Priced After Its Strong Multi Year Share Price Run?

• If you have ever wondered whether Veolia Environnement at around €29.74 is still good value after its strong run, you are not alone. This article is designed to cut through the noise for you.
• The stock is up about 1.3% over the last week, 3.9% over the past month, and 9.2% year to date, building on gains of 13.7% over 1 year, 37.4% over 3 years, and 87.7% over 5 years. This naturally raises the question of how much upside is left from here.
• Recent moves have come against a backdrop of ongoing investment in water, waste, and energy transition infrastructure across Europe, as governments and corporates lean harder into environmental services. Policy tailwinds around decarbonisation and circular economy initiatives keep Veolia in the spotlight as a key player in essential utility-like services, which can shift how investors think about both its growth potential and risk profile.
• On our framework, Veolia currently scores a 3/6 valuation check score, suggesting it looks undervalued on some measures but not all. Next we will walk through the main valuation approaches, and then finish by exploring a more nuanced way to judge whether the market is really pricing this story correctly.

Find out why Veolia Environnement's 13.7% return over the last year is lagging behind its peers.

Approach 1: Veolia Environnement Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting its future cash flows and then discounting those back into todays money. For Veolia Environnement, the model uses a 2 stage Free Cash Flow to Equity approach in €.

The latest twelve month free cash flow is about €1.95 billion, which analysts expect to rise to around €1.96 billion by 2027. Beyond the explicit analyst horizon, Simply Wall St extrapolates cash flows, with projections reaching roughly €2.17 billion by 2035 as growth gradually moderates.

When all those projected cash flows are discounted back, the DCF model points to an intrinsic value of about €58.09 per share. Compared with the current share price around €29.74, this implies the stock is trading at roughly a 48.8% discount to its estimated fair value. This suggests a substantial margin of safety if the cash flow assumptions prove realistic.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Veolia Environnement is undervalued by 48.8%. Track this in your watchlist or portfolio, or discover 916 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Veolia Environnement.

Approach 2: Veolia Environnement Price vs Earnings

For a consistently profitable business like Veolia Environnement, the Price to Earnings ratio is a useful yardstick because it links what investors pay today to the companys current earnings power. In general, faster growing and less risky businesses can justify a higher PE, while slower, more cyclical or riskier names ought to trade on lower multiples.

Veolia currently trades on about 18x earnings, which is slightly below both the Integrated Utilities industry average of around 18.0x and the peer group average of roughly 19.2x. To move beyond simple comparisons, Simply Wall St calculates a proprietary Fair Ratio, which estimates what a reasonable PE should be given Veolias earnings growth outlook, profitability, industry, market cap and risk profile. This Fair Ratio for Veolia is about 17.1x, implying the stock deserves only a small discount to the wider peer set once all those factors are considered.

Because the actual PE of 18x is only modestly above the 17.1x Fair Ratio, the shares look close to fairly valued on this metric rather than clearly cheap or expensive.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Veolia Environnement Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to turn your view of Veolia Environnement into a clear story that links its business drivers to a forecast and, ultimately, to a fair value on Simply Wall St's Community page.

A Narrative lets you spell out how you think Veolia’s revenue, earnings and margins will evolve, then automatically ties that story to a financial model that estimates fair value, so you can quickly see whether your view suggests the shares are undervalued or overvalued versus the current price.

Because Narratives update dynamically as new information like earnings releases, contract wins or regulatory changes comes in, they make it easier to decide when to buy, hold or sell by continuously comparing your Fair Value to the live market price.

For example, one Veolia Narrative might assume robust growth in water technologies, rising margins and assign a fair value near the more optimistic €45.30 target. In contrast, another, more cautious Narrative could focus on integration risks and slower mature market growth, and justify a fair value closer to the bearish €25.30. This shows how different perspectives can lead to very different investment decisions.

Do you think there's more to the story for Veolia Environnement? Head over to our Community to see what others are saying!

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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