When it comes to companies that have been beaten down further and further on the TSX today, Brookfield Renewable Partners LP (TSX:BEP.UN) has to be one of this world. The renewable energy stock had such promise, with shares hitting around $70 per share before losing more than half their value in that time.
And yet, this stock looks like a serious winner at these levels. BEP stock remains one of the top choices in my books for those seeking long-term value. So let’s get into why.
Earnings
Earnings have certainly been a point to contend with for investors seeking BEP stock as an investment. The company continued to miss quarter after quarter in terms of earnings estimates. This has led to more downturns in share price as well.
Instead of looking at how the company has performed then year after year, it might be more prudent to look at BEP and see whether revenue and earnings per share (EPS) have been improving quarter after quarter. This would help identify whether there has been some momentum in its performance.
Funds from operations (FFO) reached US$312 million during the second quarter, yet that fell to US$253 million by the third quarter. And by the time the fourth quarter came around, there was only a slight increase to US$255 million in FFO for the quarter.
Even so, this led to a record amount of FFO for BEP stock, hitting US$1.1 billion for the year. While there was certainly a drop from what the company experienced in the second quarter, the increase could mean that the company is getting back on track.
What to watch
The catalyst that could send this company climbing once more could be whether BEP can keep its FFO rising. If it’s even by a little quarter after quarter, this should allow investors to regain some confidence in the stock once more.
After all, a lot of the losses came from macro economic factors rather than BEP’s performance itself. The company saw higher costs from high interest rates as well as inflation. Furthermore, it continued to buy up companies, which BEP is known to do during tough times.
Why? Because it’s backed by a large parent company and has plenty of cash still on hand to make acquisitions when they look valuable. Acquisitions, as well as partnerships – and BEP stock now boasts several of these that expand across a wide range of renewable energy projects.
Bottom line
Right now, BEP looks like it has a fair amount of growth ahead, which would help the company increase its share price by a significant amount. It will need to demonstrate that FFO is increasing, and it’s also tackling its debt load.
But overall, this should certainly be the case for long-term investors. And right now, you can get access to a quite high 6.47% dividend yield. One that is far higher than its five-year average of 4.28%. So while BEP stock has some rough waters ahead, long-term investors should be drooling over the future share growth of this still stable company.
