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Bear of the Day: Brookfield Renewable Partners (BEP)
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Brookfield Renewable Partners (BEP - Free Report) ) currently lands a Zacks Rank #5 (Strong Sell) with its Utility-Electric Power Industry currently in the bottom 36% of over 250 Zacks Industries.
The broader Utility sector is down -6% year to date. While there will be winners in the space, a mild winter has led to lower energy usage which is affecting many utility companies. Brookfield is focused on alternative energy sources but will certainly feel some of the brunt of this as well in a developing market.
Declining Earnings Estimates
Through its renewable energy platform, Brookfield operates a portfolio of assets that include hydroelectric generating, wind facilities, and natural gas-fired plants. The future of many alternative energy sources is still in the beginning stages of growth and the broader clean energy concept has immense long-term potential, but the bottom line of companies like Brookfield and others still matters now.
Image Source: Zacks Investment Research
To that note, Brookfield is on the cusp of posting positive adjusted earnings this year with EPS projected at $0.12 a share in fiscal 2023 compared to EPS of -$0.60 in 2022. However, earnings estimates are notably declining after the company widely missed Q4 top and bottom line expectations in early February along with its underwhelming guidance.
Wall Street was looking for more positivity regarding the company’s bottom line as Brookfield has now missed earnings expectations for eight consecutive quarters leaving many concerned about the company’s profitability hopes.
Image Source: Zacks Investment Research
Recent Performance & Valuation
Year to date, BEP stock is up +3% to roughly match the S&P 500’s +4% and outpace the Utility – Electric Power Markets -6%. However, over the last three years, BEP is down -27% to largely trail the benchmark and its Zack Subindustry’s -10%.
Image Source: Zacks Investment Research
Trading around $26 per share, investors can gauge Brookfield’s earnings on a forward-looking basis for the first time with the company edging toward profitability. While this is a start in the right direction if it comes to fruition, BEP does trade at 213.3X forward earnings, which is well above the industry average of 17.1X. And the declining earnings estimates offer no support for paying a premium for future growth right now.
Bottom Line
Investors and Wall Street may be losing patience with Brookfield Renewable Partners stock as a string of earnings misses has been deflating to the sentiment surrounding its growth prospects as an alternative energy player. The declining earnings estimates are starting to look more and more like a warning sign at the moment and for now, investors should approach BEP stock with caution.
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Bear of the Day: Brookfield Renewable Partners (BEP)
Brookfield Renewable Partners (BEP - Free Report) ) currently lands a Zacks Rank #5 (Strong Sell) with its Utility-Electric Power Industry currently in the bottom 36% of over 250 Zacks Industries.
The broader Utility sector is down -6% year to date. While there will be winners in the space, a mild winter has led to lower energy usage which is affecting many utility companies. Brookfield is focused on alternative energy sources but will certainly feel some of the brunt of this as well in a developing market.
Declining Earnings Estimates
Through its renewable energy platform, Brookfield operates a portfolio of assets that include hydroelectric generating, wind facilities, and natural gas-fired plants. The future of many alternative energy sources is still in the beginning stages of growth and the broader clean energy concept has immense long-term potential, but the bottom line of companies like Brookfield and others still matters now.
Image Source: Zacks Investment Research
To that note, Brookfield is on the cusp of posting positive adjusted earnings this year with EPS projected at $0.12 a share in fiscal 2023 compared to EPS of -$0.60 in 2022. However, earnings estimates are notably declining after the company widely missed Q4 top and bottom line expectations in early February along with its underwhelming guidance.
Wall Street was looking for more positivity regarding the company’s bottom line as Brookfield has now missed earnings expectations for eight consecutive quarters leaving many concerned about the company’s profitability hopes.
Image Source: Zacks Investment Research
Recent Performance & Valuation
Year to date, BEP stock is up +3% to roughly match the S&P 500’s +4% and outpace the Utility – Electric Power Markets -6%. However, over the last three years, BEP is down -27% to largely trail the benchmark and its Zack Subindustry’s -10%.
Image Source: Zacks Investment Research
Trading around $26 per share, investors can gauge Brookfield’s earnings on a forward-looking basis for the first time with the company edging toward profitability. While this is a start in the right direction if it comes to fruition, BEP does trade at 213.3X forward earnings, which is well above the industry average of 17.1X. And the declining earnings estimates offer no support for paying a premium for future growth right now.
Bottom Line
Investors and Wall Street may be losing patience with Brookfield Renewable Partners stock as a string of earnings misses has been deflating to the sentiment surrounding its growth prospects as an alternative energy player. The declining earnings estimates are starting to look more and more like a warning sign at the moment and for now, investors should approach BEP stock with caution.