odyd

Pattern Energy Group Inc. (PEGI)

193 posts in this topic

PEGI is about to face its moment of truth against the downtrending 200 MA ($20.69), which has been above the share price since the summer 2015 when all the yieldcos broke down. If they break it, prepare for takeoff! (it could drag up the rest of the yieldcos, and it can even coincide with the end of the whole SUNE drama so its yieldcos can trade at their true value). I'll be watching closely and might initiate a position if PEGI breaks this level. 

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I was looking at PEGI and trying to get my head around its valuation, but I find it not so cheap. So wanted to share my thoughts to see if I am missing anything.

From portfolio perspective, it is certainly top-notch. Also no IDR, strong parent with one of the best corporate structure.

From valuation perspective, it seems slightly expensive on EV/EBITDA basis. I use this instead of div yield as not all companies amortize debt fully and depending on the difference in corporate and project level debt, this can lead to quite some difference. Pattern amortized only around 54M of its debt in 2015, from total of around 1.8B. This is quite low IMO and potentially overstates the cash available for distribution. Also it is trading at close to 2xBV...

Would be great to know what others think of this.

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BV fully agree. Their CAFD expectation is certainly attractive based on the increase in revenues, but the price of new contracts is curtailing the revenue growth to a degree. In my opinion, they will have an issue in time with their agenda to increase CAFD. The CAFD uses a lot of the cash flow already I think around 90% leaving little for investing or even just to keep the cash on books. I still like the stock. I think it can go up to about $30, but I would be selling at $25 if I held it to this point. Yield is fueling it my opinion the equity part. I got into NEP. Under 1 BV and I think they can move a lot on yield I think when things are good it can go to $45 per share.

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Looks like what I said about the yieldco space recovering is taking place. Many are crossing the 200MA which is a very good technical indicator. Let's see if they remain above.. PEGI has already crossed it. 

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2 hours ago, ravalos said:

Looks like what I said about the yieldco space recovering is taking place. Many are crossing the 200MA which is a very good technical indicator. Let's see if they remain above.. PEGI has already crossed it. 

Exciting times

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1 hour ago, odyd said:

PEGI disappoints, in my opinion, enters to sell $200M worth of stock

Isn't this good news? Selling stock at PB > 1 means growth is funded in an anti-dilutive manner for existing share holders (BV per share increases from the stock sale).

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Market didn't seem to like the ER from PEGI. I quickly skimmed the ER and the thing that jumped out at me was the plants power generation, below expected as a result of "El Nino". Winds are not blowing as strong.. This is the problem with wind assets, they are less reliable than solar. 

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