Veolia Earnings: Management Confirms 2023 Earnings Guidance After Strong Results; Shares Undervalued

We confirm our EUR 31 fair value estimate after no-moat Veolia released solid 9-month results and confirmed its 2023 earnings guidance. Veolia also indicated that its net debt position will be lower than it previously expected at year-end, but in line with our expectations. Shares have slipped recently owing to concerns over the impact of the economic slowdown on the group. This offers an entry point for investors as the group has proved in the past that it can increase cost savings in such a situation. Also, the weight of cyclical activities is lower than in the past at 15% of turnover. We forecast a 2023 dividend of EUR 1.22, 9% above 2022, implying a 4.6% yield.