There’s no denying that decarbonisation is an investment theme for the long term, but clean-energy producers have been facing economic and supply chain headwinds, and these may continue into the near future. Here is a collection of stocks to watch following recent clean energy earnings reports.
- UK regulators have cleared Brookfield Renewable to buy nuclear power plant equipment maker Westinghouse.
- Itron Technologies lifts its full-year revenue guidance on the back of improving supply chain conditions.
- NextEra Energy Partners cuts its dividend growth rate due to “tighter monetary policy and higher interest rates”.
Vestas Wind Systems
The Improving Outlook Stock
Vestas Wind Systems [VWDRY] reports third-quarter (Q3) 2023 earnings on 8 November. The focus will be on how the company is faring with regard to returning to profitability. Losses narrowed slightly year-over-year in Q2 to €115m, down from €119m, while losses for the first half (H1) were €99m, a significant improvement on the €884m reported in H1 2022. “Although supply chain disruptions are easing off, we expect disruptions to continue throughout the second half of the year,” commented President and CEO Henrik Andersen in the Q2 203 earnings report.
The Nuclear Acquisition Stock
Brookfield Renewable Partners [BEP], which operates hydroelectric and wind power generation facilities, last week posted a $24m profit in Q3 2023, having reported a loss of $77m for the year-ago quarter. Revenue rose slightly from $1.11bn to $1.18bn. Brookfield Renewables shares are up 10.1% in the past week, boosted by news that the UK government has cleared the company and uranium miner Cameco [CCJ] to acquire nuclear power plant equipment maker Westinghouse.
The Revised Guidance Stock
Itron Technologies [ITRI] reported that revenue surged 33% to $561m in Q3 2023, thanks to “improving supply chain conditions” and success executing its strategic objectives. The company, which develops solutions to help cities improve water and waste management, ended the three months to 30 September with a cash balance of $255m, which “provides ample liquidity and flexibility as we continue to execute our strategic objectives”, said President and CEO Tom Deitrich in the earnings release. Full-year revenue has been revised upwards to $2.16–2.17bn from previous guidance of $2.11–2.14bn.
NextEra Energy Partners
The Dividend Cut Stock
NextEra Energy Partners [NEP] announced in September that it was revising its dividend growth rate to 5–8% per year, down from previous guidance of 12–15%, due to “tighter monetary policy and higher interest rates” impacting cash generated from its energy projects. Chief Financial Officer Kirk Crews commented on the Q3 2023 earnings call at the end of October that economic conditions had “made it difficult to support a 12% growth rate in a way that is sustainable and in the best interest of unit holders over the long term”. Nevertheless, NextEra Energy Partners’ share price jumped 15% on the day and is up 20.6% since, although it is down 59.7% year-to-date
The Profitability Growth Stock
Nextracker [NXT] is to spin off from parent company Flex, the provider of solar tracker and software solutions said at the end of last month. The announcement coincided with the release of Q2 2024 earnings. Revenue increased 23% year-over-year to $573m, while adjusted EBITDA was up 164% to $110m. “Profitability growth was primarily driven by a strong execution of strategic supply chain repositioning capacity expansion and continued focus on pricing discipline,” commented CEO Daniel Shugar on the earnings call.
Another Way to Invest in Clean Energy
The ALPS Clean Energy ETF
The ALPS Clean Energy ETF [ACES], which holds all five stocks, has allocated 26.1% of its portfolio to electric vehicles and 26.1% to solar. Wind and hydro/geothermal have weightings of 15.1% and 10.4% respectively, while bioenergy, fuel cell and hydrogen, and energy management and storage all have single-digit allocations as of 6 November. The fund is down 40.1% in the past year and down 25.1% in the past six months.
The Invesco Global Clean Energy ETF [PBD] holds Itron, Brookfield and Vestas. As of 3 November, the fund has allocated 40.5% of its portfolio to industrials, 24.9% to utilities and 17.8% to information technology. The fund is down 22.9% in the past year and down 23% in the past six months.