Skip to Content
Morningstar

Brookfield Renewable Earnings: Firm on Pace To Surpass Equity Deployment Targets

""
Securities In This Article
Brookfield Renewable Partners LP
(BEP.UN)
Brookfield Renewable Corp Ordinary Shares - Class A (Sub Voting)
(BEPC)
Brookfield Renewable Partners LP
(BEP)
Brookfield Renewable Corp Ordinary Shares - Class A (Sub Voting)
(BEPC)

We lower our fair value estimate for Brookfield Renewable Partners BEP/BEP.UN to $31 (CAD 42) from $32 (CAD 43) following second-quarter results and after updating our model for recent transactions. Additionally, we lower our fair value estimate for Brookfield Renewable Corp. BEPC/BEPC to $32 (CAD 43) from $33 (CAD 44). We view shares as undervalued.

Brookfield Renewable Partners reported funds from operations per unit up 4% year on year in the second quarter. Results were diminished by below-average generation within the company’s North American hydro portfolio, which saw generation 15% below the long-term average. We place little emphasis on quarterly variations in this portfolio, as we expect these to even out over time.

Brookfield Renewable has committed to invest $1.3 billion in acquisitions year to date, putting it on a path to well surpass its annual target. The company expects the Westinghouse, Duke Energy Renewables, and X-Elio acquisitions to close in the second half of 2023, while the Origin acquisition should close in early 2024.

Despite Brookfield Renewable tracking well ahead of its annual equity deployment targets, we expect the company to remain acquisitive. The current volatility in the renewables market should play to the firm’s strengths around capital allocation (Exemplary Capital Allocation Rating). To date the company has executed $400 million of asset recycling activities. We expect further asset recycling activities to support growth, with a particular focus on selling core wind and solar assets in developed markets.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

More in Stocks

Oracle Earnings: IaaS Signings More Than Make Up for Miss

We’ve raised our fair value estimate for Oracle’s stock.
Julie Bhusal Sharma

This Undervalued Stock Is a Buy After Its Dividend Increase

Dividend stock investors can pick up a 4% yield at a big discount.
Kevin Brown, CFA

After Earnings, Is Nio Stock a Buy, a Sell, or Fairly Valued?

With weaker revenues and vehicle margins, here Morningstar’s outlook for Nio’s stock.
Vincent Sun, CFA

About the Author

Brett Castelli

Equity Analyst
More from Author

Brett Castelli is an equity analyst, energy and utilities, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. His coverage focuses on clean energy companies across renewables and emerging technologies.

Before joining Morningstar in 2021, Castelli spent more than eight years in various analyst roles for TortoiseEcofin, a boutique asset manager. His coverage focused on North America and included companies within traditional energy, electric utilities, and renewables. Additionally, he assisted with the firm's environmental, social, and governance efforts and played an important role in integrating ESG into the investment process. Castelli spent a year at the firm's London office following an acquisition.

Castelli holds a bachelor's degree in finance from the University of Missouri's Trulaske College of Business. He also holds the Chartered Financial Analyst® designation.

Sponsor Center