Several years ago Moody’s investor service ran a report which compared Veolia to Suez Environnment. It identified key areas which factored into Suez’s favorable rating:
Comparative strategies - We think SUEZ Environnement’s strategy has been more settled and consistent than Veolia’s in recent years. A more settled business profile is likely also to differentiate it from Veolia over 2012 and 2013 during Veolia’s ‘Transition Period’.
Water & waste water. - We think SUEZ Environnement’s water division has a stronger business risk profile overall, and is not suffering the same pressure on margins being experienced by Veolia’s French water business. To the extent pressure on Veolia’s margins begins to abate, as its reorganization in France bears fruit and returns in China grow, that differential could narrow.
Waste - Overall we view the business risk profiles as broadly similar. International operations. While international markets present a control challenge for both companies, we see SUEZ Environnement’s international presence as lower risk because it has a more concentrated presence in fewer countries, and because a substantial proportion of its investment (in Chile and the US) is in regulated assets. As Veolia delivers on its planned implification of the group, the differential in risk profile should narrow.
Other businesses - Veolia’s Energy Services division provides some risk diversification from its core businesses.
Financial analysis - Veolia has historically operated with more leverage than SUEZ Environnement. The difference should narrow over the next two years..
The faster than expected execution of the reorganization/convergence plan and favorable asset disposal significantly narrows the risk profile of Veolia and makes the two companies much more similar. Veolia's net debt/EBITDA is now comparable to Suez's net debt/EBITDA of 3x.
Now consider this chart: VE vs SZEVY
Based on what Suez is trading, I believe Veolia should be valued at $20-25/share maybe more due to its larger size.
Agree, its a excellant business & a great longterm forever stock! In a IRA they only took out 15% taxes which is great, I reinvest the dividend for the next 12-15 years. They are the largest water company in the company.
Will buy more if it goes to 9-10 usd a share during a summer correction!