Brookfield Renewable (TSX:BEP.UN): Is Recent Momentum Justified by Current Valuation?

Brookfield Renewable Partners (TSX:BEP.UN) has seen its shares move higher over the past month, supported by steady revenue growth and a significant jump in net income. Investors are watching the stock’s performance as renewables continue to receive attention.

See our latest analysis for Brookfield Renewable Partners.

Brookfield Renewable Partners’ recent rally has pushed its share price up nearly 12% over the past month, adding to a sharp 28% gain year to date. The company’s total shareholder return stands at 29% for the past year, reflecting renewed optimism around renewables and growing confidence in its business model. Momentum is clearly building, with recent gains outpacing longer-term performance and suggesting that investor sentiment toward the sector has shifted in a positive direction.

If you’re watching renewables make headlines and want to broaden your search, now is a good time to discover fast growing stocks with high insider ownership

But with shares rallying and recent results drawing attention, investors are left to wonder whether Brookfield Renewable Partners is still trading at a bargain. Has the market already factored in the company’s future growth prospects, leaving little room for upside?

Most Popular Narrative: 7.9% Overvalued

Brookfield Renewable Partners closed at CA$42.75, while the most widely followed narrative assigns a fair value roughly 8% lower. This gap is stirring debate about whether momentum can keep pushing the share price higher or if expectations are becoming too optimistic.

Ongoing decline in battery and renewable energy technology costs, combined with increasing grid modernization and the need for 24/7 clean power, positions Brookfield's diversified portfolio (including recent Neoen acquisition and major battery pipeline) to capture higher-margin growth and expand overall earnings and net margins.

Read the complete narrative.

Want to know what powers this premium valuation? The narrative is built around blockbuster growth assumptions and bullish sector tailwinds. The real headline is a financial forecast with some bold upgrades few saw coming. See which numbers justify this price and if the reasoning stacks up.

Result: Fair Value of $39.61 (OVERVALUED)

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

However, a shift in U.S. policy or weaker hydroelectric output could quickly challenge Brookfield’s growth assumptions and limit investor optimism.

Find out about the key risks to this Brookfield Renewable Partners narrative.

Another View: SWS DCF Model Questions the Market Price

While analysts see Brookfield Renewable Partners as overvalued based on typical market multiples, our SWS DCF model tells a very different story. According to this discounted cash flow approach, the company trades at a steep 64% discount to its estimated fair value of CA$119.84. Could investors be overlooking long-term potential? Does the DCF fail to account for near-term risks?

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 Brookfield Renewable Partners 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 836 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Brookfield Renewable Partners Narrative

If you have a different take or want to dig into the numbers yourself, you can quickly put together your own perspective and see how it compares. Do it your way.

A great starting point for your Brookfield Renewable Partners research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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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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