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TSE:NPI
Northland Power Inc (NPI.TO)
Financials 
Technical Analysis 
Rising interest rates have not been friendly to any renewable energy stocks like NPI , but this company’s fundamentals remain sound. NPI trades at only 9.65x PE, a beta of 0.39, pays a 3.59% dividend at only a 34.68% payout ratio, and boasts a quarterly earnings growth of 168.4% year-over-year. NPI has handily beaten its last four quarters. It boasts wind, solar and hydro projects across the world, with a strong presence in Europe especially, where the company is adding 2GW of capacity in the next two years, and Asia. In late-February, NPI announced strong full-year results of revenue up 17% from full-year 2021, net income soaring 357%, and their profit margin climbing 8.5%. EPS beat the street by 28%. Read Budget winners for our full analysis.
Three big projects on the go, and the question was how were they going to be financed. Yesterday, they issued about $450M in two tranches of debt. With buildouts over the next 2 years, may see free cashflow go down a bit. Longer term, one of the better companies in wind energy, etc. Reasonable place to be. Not a tremendous yield of 3.5%. You're buying it for future increases in FCF.
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Premium contentCanadians buy utilities for their fat, reliable dividends, however rising interest rates have stolen some of that thunder and even reliable names like Northland have taken a hit in recent months. Since August 30 last year, NPI has slid from $45.45 to $33. That doesn't reflect the strong performance by this name, which has easily beaten all four of its last quarters, trades at only a 9.58x PE and a super-low 0.38 beta and pays a 3.63% dividend based on 34.68% payout ratio. Cash reserves are up, so are revenues by 17% and net income by 300%.
Premium contentWe again reiterate NPI, and independent power producer with assets worldwide, as a TOP PICK. Recently reported earnings beat expectations as revenue grew 17% and net income tripled. Cash reserves grew substantially and were added by additional shares being released. Combined, this allowed debt to be aggressively retired. We continue to recommend a tight stop at $31, looking to achieve $47 — upside potential of 41%. Yield 3.6%
(Analysts’ price target is $47.00)
Owns shares in the company.
Strong renewable business (wind power).
Operations globally helps to diverse income.
Good long term investment.
Christine Poole
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. EBSA acquisition to continue to bear fruit. Valuation in line or slightly above peers. Higher debt loads but stable cash flows. Dividend has not grown much. Unlock Premium - Try 5i Free
Premium content
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NPI is an independent Canadian based producer of renewable and natural gas produced power with a diversified geographic portfolio which expands beyond North America into Europe, Asia and Latin America. It trades at 10x earnings and 2x book value, while supporting a 24% ROE. Cash reserves are growing thanks to more shares being issued, but it has also aggressively been retiring debt. We recommend setting a stop-loss at $30, looking to achieve $45 -- upside potential of 30%. Yield 3.5%
(Analysts’ price target is $45.13)