This Renewable Energy Stock Surged by 35% Since Earnings, What Happened?

Published on: May 17, 2024
Author: Caroline Kong

Over the past two weeks, one Toronto Stock Exchange energy stock has been outperforming the broad market significantly, with shares up 35% since reporting Q1 earnings. What’s more, the stock could be generating even more returns in the future. The stock is Brookfield Renewable Partners (TSX:BEP.UN).

What Happened?

First, let’s dig into Q1 financial results, the company reported an 8% increase in funds from operations (FFO) compared to the previous year, despite reporting a net loss attributable to shareholders, demonstrating its ability to generate cash flow from operations, which is crucial for investors.

The company expects to add 7,000 megawatts (MW) of renewable energy capacity this year, demonstrating a commitment to growth and expansion. In addition, progress has been made in asset recovery activities, which are expected to generate significant revenues, further bolstering investor confidence in its ability to create value.

Furthermore, the agreement with Microsoft to deliver more than 10.5 gigawatts of renewable energy is drawing attention. This agreement not only extends a long-term partnership, but also signals the company’s ability to enter into large contracts with leading global multinationals, reflecting its position as a key player in the provision of clean energy solutions to support the growth of data centre operations.

Financially, Brookfield Renewable Partners has a strong balance sheet and $4.4 billion in available liquidity, enabling it to invest significant capital to capitalize on the exponential growth opportunities in the clean energy sector. The successful execution of nearly $6 billion in financing during the quarter underscores investors’ confidence in the company’s financial management and ability to access capital on favourable terms.

The Future Is Brighter

Brookfield Renewable Partners is targeting more than 10 per cent growth per unit of FFO over the next year, with plans for even stronger financial performance and growth. In addition, management plans to add approximately 7,000 megawatts of renewable energy generating capacity in 2024 alone. This demonstrates the company’s commitment to expanding its portfolio and its optimism for future project development.

The company is advancing its asset recovery activities, which are expected to generate $3 billion this year, reflecting a strategy to optimize its portfolio and unlock the value of mature assets. The deal with Microsoft and the available liquidity now put the company in a favourable position to start delivering more growth. Whether through this new deal or through acquisitions, the company is well positioned to deliver significant growth.

As a result, even though the stock has already risen 35%, it will certainly continue to rise in the future. At Thursday’s (16 May) closing price, the dividend yield is 5.2%, another reason to buy the stock.

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