HA Sustainable Infrastructure Capital (HASI) Secures New Credit Facilities, Is The Valuation Too Rich?

HA Sustainable Infrastructure Capital (HASI) has secured a new US$2.25b, 5 year unsecured revolving credit facility and a US$400m, 3 year term loan featuring sustainability linked margin adjustments and replacing prior arrangements.

See our latest analysis for HA Sustainable Infrastructure Capital.

Recent financing moves have come while HA Sustainable Infrastructure Capital’s share price return has been mixed in the short term, with a 30 day share price return that declined 2.79% and a 90 day share price return that declined 10.75%. At the same time, a year to date share price return of 19.30% alongside a 1 year total shareholder return of 53.49% points to momentum that has been stronger over a longer stretch, although the 5 year total shareholder return has fallen 14.54%.

If this kind of financing update has you thinking about where else capital could flow in the energy transition, it may be worth scanning 35 power grid technology and infrastructure stocks

HA Sustainable Infrastructure Capital now has more credit capacity and a lower stated cost of debt, yet the stock has already delivered a strong 1 year total return. Are current valuations still attractive enough for new buyers?

Preferred P/E of 89.9x: Is It Justified For HA Sustainable Infrastructure Capital?

On the latest figures, HA Sustainable Infrastructure Capital trades on a P/E of 89.9x while its share price stands at $37.96. That is far higher than several reference points in the data provided.

The P/E multiple compares the current share price to earnings per share and is often used as a shorthand for how much investors are paying for each dollar of earnings. For HA Sustainable Infrastructure Capital, the current P/E of 89.9x is described as expensive compared to the peer average of 10.1x and to the broader US Diversified Financial industry average of 15.2x. It is also higher than an estimated fair P/E of 19.1x that the data cites for the stock.

Those gaps are wide. The current P/E of 89.9x is several times higher than both peer and industry averages, and also well above the estimated fair P/E level of 19.1x.

Explore the SWS fair ratio for HA Sustainable Infrastructure Capital

Result: Preferred multiple of 89.9x price-to-earnings (OVERVALUED)

However, HA Sustainable Infrastructure Capital’s high P/E and reliance on continued access to low cost funding mean that any earnings setback or credit market stress could quickly challenge sentiment.

Find out about the key risks to this HA Sustainable Infrastructure Capital narrative.

Another View On HA Sustainable Infrastructure Capital's Value

While the current P/E of 89.9x for HA Sustainable Infrastructure Capital looks expensive against peers, the SWS DCF model points in a different direction. At a share price of $37.96 and an estimated future cash flow value of $52.78, the stock is described as trading below fair value. Which signal do you treat as more important?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out HA Sustainable Infrastructure Capital for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 57 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment split between a high P/E and a discounted cash flow signal, it makes sense to move quickly and test the data for yourself. To weigh up both the concerns and the potential upside before deciding what HA Sustainable Infrastructure Capital means for your portfolio, take a closer look at the 3 key rewards and 3 important warning signs.

Looking For More Investment Ideas Beyond HA Sustainable Infrastructure Capital?

If HA Sustainable Infrastructure Capital has caught your attention, do not stop there. Use the Simply Wall St screener to compare fresh ideas before the crowd does.

• Target reliable income by reviewing 8 dividend fortresses that could support a steadier stream of cash returns.
• Hunt for quality at a discount through screener containing 20 high quality undiscovered gems that many investors may not be watching yet.
• Prioritize resilience by focusing on 89 resilient stocks with low risk scores that may help smooth out the bumps in a volatile portfolio.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com