Brookfield Renewable Partners looks really interesting

2021년 3월 11일

Brookfield Renewable Partners looks like it may have found a bottom from its roughly 20% decline from it ATH.

The renewable energy sector could be a growth fad to some extent, however, my feeling is that if the renewable energy sector can scale and reduce the cost related to renewable energy technology, then why wouldn't it gain in market share particularly in developed markets?

based on the available reported numbers i have roughly calculated that from 2009 - 2020 (11 years) the company has grown its operating expenses by 8.7% per annum whilst it has grown its revenue by 8.6% per annum. That's a really attractive rate of growth but without knowing more about the company i wonder to what extent they are growing their operating expenses by reinvesting in the company. I would certainly hope that the growth in operating expenses has come predominantly through reinvesting in operations.
If we look at the operating margin for more clarity in the numbers we can see that from 2009 - 2020 (11 years) the company has grown its operating margin by 33.8% per annum.
Interesting...
Better yet its average free cash flow since 2012 is 22.56% per annum.

So what concerns me? The average debt to EBITDA from 2009 - 2020 (11 years) is 7.6x with its last reported debt to EBITDA at 8.2x. Ouch!!!
That not what I'd call a healthy stat.

Its definitely one of those companies that carries a high degree of risk due to the fact that its highly leveraged. As long as they can continue to grow their revenue and reduce their debt levels to something far more reasonable, this could be a really nice company to own for the next 5 years.

In terms of the current entry point, it looks attractive based on the DeMarker and Stochastic Momentum Index.

I wouldn't take a large position in the company more of a punt at this point.

Please note, this idea is shared for educational and discussion purposes only and should not result in speculative investment decisions in any asset class.