Scatec (OB:SCATC) Could Be 27% Undervalued Following Its New Brazil Solar Launch

Scatec (OB:SCATC) has started commercial operations at its 142 MW Rio Urucuia solar power plant in Minas Gerais, Brazil, adding capacity under a 10 year power purchase agreement with Statkraft.

See our latest analysis for Scatec.

The new Brazil project comes after a weaker trading patch, with Scatec’s share price down 4.2% over the past week and 29.9% over 90 days, while the 3 year total shareholder return is positive despite a 55.9% decline over five years.

If this type of renewable build out has your attention, it could be a good time to widen your watchlist with 34 power grid technology and infrastructure stocks

Bulls will point to Scatec’s growing Brazilian footprint and recent revenue and net income growth, while bears focus on the share price slide and mixed long term returns. With these contrasting views, which side does the valuation evidence lean toward next?

Most Popular Narrative: 26.8% Undervalued

Based on the most followed narrative, Scatec’s fair value of NOK129.89 sits well above the last close at NOK95.10, which puts the recent Brazil update into a wider valuation context.

The company's rapidly expanding growth portfolio, including a record-high backlog of 3.2 GW, an additional 2 GW under construction, and a pipeline of 7.7 GW of mature projects across multiple technologies and geographies, signals the potential for continued top-line growth and a doubling of installed capacity over the next two years, which would positively impact future revenues.

Read the complete narrative.

Want to see what sits behind that growth pipeline and fair value? The narrative leans on ambitious revenue expansion, fatter margins, and a lower future earnings multiple than many might expect.

Result: Fair Value of NOK129.89 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the Scatec story can shift quickly if emerging market projects face regulatory or payment setbacks, or if higher financing costs squeeze returns on new builds.

Find out about the key risks to this Scatec narrative.

Another View: What Scatec’s Sales Multiple Is Saying

While the Scatec narrative leans on a fair value of NOK129.89, the current P/S ratio of 4.2x tells a different story. It sits above the European renewable energy average of 2.8x, yet far below a fair ratio of 20.3x. This suggests sizeable repricing risk in both directions. Which signal do you weigh more heavily?

For a closer look at how this sales multiple compares with peers and the fair ratio, check the valuation breakdown in See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Mixed messages across Scatec’s share price, fair value and growth pipeline make the overall sentiment anything but settled. Review the data for yourself, weigh the trade off between promise and risk, and then check the 3 key rewards and 3 important warning signs

Looking For More Investment Ideas Beyond Scatec?

If Scatec has sharpened your interest in renewables and valuation, do not stop here. Broaden your watchlist and compare other opportunities side by side.

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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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