- If you are wondering whether HA Sustainable Infrastructure Capital at US$36.75 is still reasonably priced after its recent run, the next sections break down what the current share price might be implying about value.
- The stock has returned 0.9% over the last 7 days, 0.6% over the past month, 15.5% year to date and 33.8% over the last year, while the 3 year return sits at 53.5% and the 5 year return at a 13.7% decline.
- These mixed returns over different time frames give important context, especially for readers weighing shorter term momentum against a longer term track record. Recent coverage has focused on how investors interpret HA Sustainable Infrastructure Capital's role in sustainable infrastructure financing and the risks that can come with that exposure.
- Right now, the company has a valuation score of 3 out of 6. The rest of this article will walk through what different valuation methods say about that number, and will end with a broader way to think about whether the current price makes sense.
Approach 1: HA Sustainable Infrastructure Capital Excess Returns Analysis
The Excess Returns model looks at how much profit a company is expected to earn above the return that shareholders require, based on its equity cost, and then capitalizes those extra profits into an estimated value per share.
For HA Sustainable Infrastructure Capital, the model starts with a Book Value of US$20.25 per share and a Stable EPS of US$3.60 per share, based on weighted future Return on Equity estimates from 6 analysts. The implied Cost of Equity is US$2.14 per share, which leaves an Excess Return of US$1.46 per share. That excess is supported by an average Return on Equity of 15.64% and a projected Stable Book Value of about US$23.00 per share, sourced from weighted future Book Value estimates from 5 analysts.
Putting these inputs together, the Excess Returns model points to an intrinsic value of about US$47.66 per share, compared with the current share price of US$36.75. This gap implies the shares are trading at roughly a 22.9% discount to the model’s estimate.
Result: UNDERVALUED
Our Excess Returns analysis suggests HA Sustainable Infrastructure Capital is undervalued by 22.9%. Track this in your watchlist or portfolio, or discover 58 more high quality undervalued stocks.
Approach 2: HA Sustainable Infrastructure Capital Price vs Earnings (P/E)
For a profitable company, the P/E ratio is a helpful way to see how much you are paying for each dollar of current earnings. Higher growth expectations or lower perceived risk tend to justify a higher P/E, while slower growth or higher risk usually points to a lower, more conservative multiple.
HA Sustainable Infrastructure Capital currently trades on a P/E of 23.91x. That sits above the Diversified Financial industry average P/E of 15.36x and also above the peer group average of 12.58x, so the stock is priced at a higher earnings multiple than many sector peers.
Simply Wall St’s Fair Ratio for the stock is 14.60x. This is a proprietary estimate of what a “normal” P/E could look like given factors such as the company’s earnings growth profile, its industry, profit margins, market cap and key risks. Because it adjusts for these company specific drivers, the Fair Ratio can be more tailored than a simple comparison with broad industry or peer averages.
Comparing the current P/E of 23.91x with the Fair Ratio of 14.60x suggests the market price sits above this model based reference point.
Result: OVERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.
Upgrade Your Decision Making: Choose your HA Sustainable Infrastructure Capital Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives, which are simply the story you believe about a company, translated into numbers like fair value, future revenue, earnings and margins.
A Narrative links what you think about HA Sustainable Infrastructure Capital’s business, its risks and opportunities, to a forecast and then to a fair value that you can compare directly with today’s share price.
On Simply Wall St’s Community page, Narratives are an easy tool used by millions of investors, helping you see whether your view suggests the stock is above or below your own fair value estimate, and they automatically refresh when new information such as earnings or news is added.
For example, one HA Sustainable Infrastructure Capital Narrative on the Community page might assume very cautious revenue growth and modest margins, while another could assume stronger revenue growth and higher margins, leading to very different fair values and decisions about how the current price compares.
Do you think there's more to the story for HA Sustainable Infrastructure Capital? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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