As of September 4, 2025, Covanta Holding Corp's estimated intrinsic value ranges from $2.63 to $37.24 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $37.24 | +83.8% |
| Discounted Cash Flow (5Y) | $24.27 | +19.8% |
| Dividend Discount Model (Multi-Stage) | $18.33 | -9.5% |
| Dividend Discount Model (Stable) | $2.63 | -87.0% |
| Earnings Power Value | $9.81 | -51.6% |
Is Covanta Holding Corp (CVA) undervalued or overvalued?
With the current market price at $20.26, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Covanta Holding Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.17 | 1.31 |
| Cost of equity | 8.1% | 11.0% |
| Cost of debt | 4.0% | 13.1% |
| Tax rate | 27.0% | 27.0% |
| Debt/Equity ratio | 0.95 | 0.95 |
| After-tax WACC | 5.6% | 10.3% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $24 | $5,634M | 84.8% |
| 10-Year Growth | $37 | $7,345M | 71.0% |
| 5-Year EBITDA | $17 | $4,703M | 81.8% |
| 10-Year EBITDA | $27 | $5,941M | 64.2% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $270M |
| Discount Rate (WACC) | 10.3% - 5.6% |
| Enterprise Value | $2,616M - $4,835M |
| Net Debt | $2,430M |
| Equity Value | $186M - $2,405M |
| Outstanding Shares | 132M |
| Fair Value | $1 - $18 |
| Selected Fair Value | $9.81 |
| Metric | Value |
|---|---|
| Market Capitalization | $2674M |
| Enterprise Value | $5104M |
| Trailing P/E | 106.97 |
| Forward P/E | 164.57 |
| Trailing EV/EBITDA | 8.40 |
| Current Dividend Yield | 168.27% |
| Dividend Growth Rate (5Y) | -9.21% |
| Debt-to-Equity Ratio | 0.95 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $11.17 |
| Discounted Cash Flow (5Y) | 25% | $6.07 |
| Dividend Discount Model (Multi-Stage) | 20% | $3.67 |
| Dividend Discount Model (Stable) | 15% | $0.39 |
| Earnings Power Value | 10% | $0.98 |
| Weighted Average | 100% | $22.28 |
Based on our comprehensive valuation analysis, Covanta Holding Corp's intrinsic value is $22.28, which is approximately 10.0% above the current market price of $20.26.
Key investment considerations:
Given these factors, we believe Covanta Holding Corp is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.