Citi: GFL’s solid waste price increases and acquisitions support growth, while fuel costs weigh on earnings per share

Which operating changes exceeded Citi’s expectations in the third quarter?

GFL’s solid waste prices rose 5.7% in the third quarter, again exceeding Citi’s expectations. Volumes also came in above the bank’s forecast, with growth in municipal solid waste, construction and demolition waste, and special waste.
Secure contributed revenue and EBITDA during the quarter, while margins in the existing business also improved: underlying margins rose 125 basis points year over year in the third quarter. The company also raised its 2026 guidance.

Diesel prices rose rapidly in the middle of the month, while the associated costs cannot be recovered until fuel prices fall, weighing on earnings. Citi believes continued improvements to the fuel surcharge mechanism may have prevented an additional cost shock.
GFL’s actual third-quarter earnings per share were 0.24 Canadian dollars, below Citi’s previous forecast of 0.34 Canadian dollars. Citi cut its full-year 2026 earnings-per-share forecast from 0.88 to 0.77 Canadian dollars, below the 0.83 Canadian dollars recorded in 2025.

Citi believes GFL could generate EBITDA of 3.125 billion to 3.15 billion Canadian dollars in 2027. Its reasoning includes 8 months of Secure contributions that have yet to enter the prior-year comparison base, improving underlying margins, and roughly flat volumes.
Citi expects long-term synergies from Secure could reach 50 million to 75 million; the currency was not specified in the discussion. Whether integration of the acquisition achieves the expected earnings level will also affect the outcome.
Citi raised its target price from 51 to 52 US dollars and maintained its buy rating. The bank believes the current valuation does not fully reflect the medium-term potential of ongoing acquisition integration and earnings growth from renewable natural gas.

GFL has formed a special committee of independent directors to review unsolicited acquisition proposals and has asked bidders to submit updated offers by 9 November 2026.
Citi’s base case remains that GFL stays publicly listed. The bank believes a potential acquisition price in the low-to-mid 50s of US dollars per share would be difficult to achieve: the stock traded near 52 US dollars in May 2025, while the average sell-side target price compiled by FactSet is 54 US dollars.