The outlook for this renewable power firm remains bright despite COVID-19’s short-term impact on power use by businesses, including industrial users.
The firm continues to build promising projects and in the meantime its long-term guaranteed contracts provide lots of cash flow for existing dividends and potential future increases.
INNERGEX RENEWABLE ENERGY (Toronto symbol INE; www.innergex.com) operates 37 hydroelectric plants, 32 wind farms and six solar power fields. They’re spread across Quebec, Ontario, B.C., Texas, Idaho, France and Chile. The company gets 57% of its power from wind, 29% from hydroelectric and 14% from solar.
In February 2020, Innergex formed an alliance with Hydro-Quebec to expand their renewable energy businesses. Hydro-Quebec also bought $661 million of Innergex stock for a 19.9% stake in the company.
For the three months ended September 30, 2020, overall revenue rose 13.9%, to $162.7 million from $142.8 million a year earlier. Excluding one-time items, earnings fell 1.5%, to $13.38 million from $13.59 million, on higher depreciation charges and income taxes. With more shares outstanding due to the Hydro-Quebec deal, earnings per share declined 33.3%, to $0.06 from $0.09.
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Value Stocks: New projects should boost future cash flow
Still, the cash from Hydro-Quebec will help Innergex build four promising new projects: two wind, one solar and one hydro. The company expects to spend $909.3 million on those operations, which should start up in 2021 and 2022.
The company recently invested $77.3 million in six Idaho wind farms (with a total capacity of 138 megawatts). The six 23-megawatt wind farms—Cold Springs, Desert Meadow, Hammett Hill, Mainline, Ryegrass and Two Ponds—have a total installed capacity of 138 megawatts. The Idaho Power Company will buy 100% of that power for the next 12.5 years, which cuts the risk of this investment for investors.
With the April 2020 payment, Innergex raised its dividend by 2.9%. The stock now yields a solid 2.7%. Innergex’s dividend has grown an average of 3.0% annually over the last 5 years.
The company’s Dividend Sustainability Rating is Above Average.
I’d be interested to see further analysis of this company. It appears to be swimming in debt compared to other utilities, increasingly negative free cash flow, high P/E, high P/B, high debt to equity, and already up substantially since it’s March 2020 low. I would love to add more green stocks, but this one sounds risky at this point in time. What am I missing? Can they grow their way out of this in the near to medium term? I want to “green” my portfolio over time with stocks like this — green companies I sincerely wish to succeed, but only when the price is right and they make an attractive investment. I’m willing to be convinced otherwise, but I still don’t see that INE fits the bill yet.
Thanks for your feedback, Leonard. We continue to like Innergex as a buy given its diverse mix of hydroelectric, wind and solar power. That diversity, along with plenty of long-term contracts, provides stable cash flows for distributions. That also lets this utility firm continue to build up its operations.
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I’d be interested to see further analysis of this company. It appears to be swimming in debt compared to other utilities, increasingly negative free cash flow, high P/E, high P/B, high debt to equity, and already up substantially since it’s March 2020 low. I would love to add more green stocks, but this one sounds risky at this point in time. What am I missing? Can they grow their way out of this in the near to medium term? I want to “green” my portfolio over time with stocks like this — green companies I sincerely wish to succeed, but only when the price is right and they make an attractive investment. I’m willing to be convinced otherwise, but I still don’t see that INE fits the bill yet.
Thanks for your feedback, Leonard. We continue to like Innergex as a buy given its diverse mix of hydroelectric, wind and solar power. That diversity, along with plenty of long-term contracts, provides stable cash flows for distributions. That also lets this utility firm continue to build up its operations.
My pick (F) FEB 2021Acending Triangle as for NGC.V tracked this stock for months seeing only sellers
Thanks for your comment.
Ford(F)retracement very short,strong buy.
Thanks for your opinion on this Wall Street Stock Forecaster recommendation.