CWST - Casella Waste Systems

[rukawa]

I am not posting this because its a great stock. I just don't get the valuation. Its trading at 45.75.  Its been losing money for a while. It trades at 3 times sales per share and something like 100 times earnings. I would probably value it at 10 or less. Its growing but nothing spectacular. What am I missing?

 

I think its hugely overvalued but I can't see any real reason for it.

[Diesel2]

Agree it looks expensive now. I bought it in 2016 but then sold ("too early") in the $30's. I haven't followed closely for over a year. They implemented a long term financial plan a few years back (and another one since) and hit those targets, but reported margins haven't done much though (just glancing at CapIQ). Management's credibility has improved. When I bought CWST the stock was cheap vs larger public comps (and on an absolute basis) and there was such a huge gap between their margins compared to comps I thought it was a good risk-reward, especially if leverage came down.

 

A few years back they had an activist threaten a proxy fight which was eventually dropped, but it lit a fire under the company. It went from a dinky small cap with questionable related party transactions to a more legit public company.

 

Waste management is a great business in general where density is important and the incremental margins should be high. I would speculate the market thinks CWST is an attractive acquisition target, especially with a 68 year old Founder/CEO/Chairman still running it. Tough to get comfortable with this valuation, but I could be missing something more nuanced.