This time last year, we identified an undervalued multi-utility that was set to benefit from a loosening in ECB monetary policy - Paris-listed Veolia Environnement SA (FR: VIE). The group's shares have performed well in the intervening period, up 49 per cent before currency effects, and although the water/waste management group is still trading below its historic earnings premium to rivals, we think that it's probably time to book profits.
The group's recent investor day highlighted the extent of the group's progress in deleveraging and cutting back costs in the period 2013-15, but growth expectations in its core markets are steady rather than spectacular for the coming year - so we feel any further upside will be limited.
Admittedly, the group continues to draw in big-ticket contracts through a widening international scope. Earlier this year, Veolia inked a traditional waste services contract in Australia worth around €469m over the next 10 years, while a US agreement with Antero Resources to operate a fracking water reuse and recycle plant could eventually generate another €360m. The increased commitment to overseas expansion is driving growth, but debt remains relatively high.
