Is There Any Hope for Brookfield Renewable Stock?

Brookfield Renewable stock (TSX:BEP.UN) may be going through a rough patch, but recent moves suggest more is yet to come.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published July 22, 2024 5:00 pm EDT

Brookfield Renewable Partners L.P. (TSX: BEP.UN) has been a prominent player in the renewable energy sector, but recent market fluctuations have left investors questioning whether the stock can make a full rebound. So today, let’s delve into the latest news reports, analyst recommendations, and earnings releases to assess the potential for Brookfield Renewable’s comeback.

Aerial view of a wind farm — Source: Getty Images

Earnings still a mixed back

First, the reason Brookfield Renewable stock hasn’t done so well. Brookfield Renewable reported its Q1 2024 earnings, revealing both challenges and opportunities. The company posted a net income of US$160 million, a significant increase from the previous year’s US$110 million. However, revenue growth was slower than expected, with a 5% year-over-year increase to $1 billion, missing analysts’ expectations. The primary reasons cited were lower hydrology levels and unexpected maintenance costs.

Despite these setbacks, Brookfield Renewable’s earnings before interest, taxes, depreciation, and amortization (EBTIDA) rose to US$635 million. This was a 7% increase from the previous year. This growth was driven by strategic acquisitions and new projects coming online, demonstrating the company’s resilience and potential for future gains.

Analysts remain cautiously optimistic about Brookfield Renewable’s prospects. According to a recent report by TD Securities, the stock is rated as a “Buy” with a price target of $40, reflecting a potential upside of 15% from the current trading price. RBC Capital Markets also maintains a “Buy” rating, citing the company’s diversified asset base and strong management team as key strengths.

However, some analysts urge caution due to the ongoing volatility in the renewable energy market. A report from BMO Capital Markets advises a “Hold” rating, highlighting concerns over regulatory uncertainties and the potential impact of rising interest rates on the company’s financing costs.

New CEO on board?

Brookfield Renewable stock is currently controlled by 36-year-old Connor Teskey. And word is, he could be getting a serious upgrade. There are rumours that Teskey is being groomed to take over as the next CEO for Brookfield Asset Management (TSX: BAM). While there is no immediate plan for a leadership change, the company’s long-time CEO, Bruce Flatt, hinted at a future transition.

Flatt himself became CEO in his thirties over two decades ago, setting a precedent for young leadership. Flatt emphasized that any succession would occur only when clients are entirely comfortable with the change. Should Teskey take the top spot, there would be an open space for a fresh CEO for Brookfield Renewable as well.

A path to recovery

Beyond a CEO change for Brookfield overall, there are reasons to consider this stock for future long-term growth. The renewable energy sector as a whole has faced headwinds, including supply chain disruptions and fluctuating energy prices. Despite these challenges, Brookfield Renewable has continued to invest in growth opportunities. The company’s recent acquisition of a 1,200 MW solar project in Brazil and the expansion of its European wind portfolio underscore its commitment to long-term growth.

Brookfield Renewable’s focus on innovation and sustainability positions it well to capitalize on the global transition to renewable energy. The company’s strong track record and strategic vision provide a solid foundation for a potential rebound.

Bottom line

While Brookfield Renewable faces near-term challenges, the company’s strategic initiatives and strong leadership team offer hope for a rebound. Investors should keep a close eye on upcoming earnings releases and market developments. With Connor Teskey poised to lead the company into the future, Brookfield Renewable is well-positioned to navigate the evolving energy landscape and deliver long-term value to its shareholders.