Is It Too Late To Consider Buying Brookfield Renewable Corporation (TSE:BEPC)?

Today we're going to take a look at the well-established Brookfield Renewable Corporation (TSE:BEPC). The company's stock saw a decent share price growth in the teens level on the TSX over the last few months. As a large-cap stock, it seems odd Brookfield Renewable is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Brookfield Renewable’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Brookfield Renewable

What's The Opportunity In Brookfield Renewable?

Great news for investors – Brookfield Renewable is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Brookfield Renewable’s ratio of 7.85x is below its peer average of 44.54x, which indicates the stock is trading at a lower price compared to the Renewable Energy industry. What’s more interesting is that, Brookfield Renewable’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Brookfield Renewable?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Brookfield Renewable, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Although BEPC is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to BEPC, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on BEPC for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Brookfield Renewable, you'd also look into what risks it is currently facing. Be aware that Brookfield Renewable is showing 4 warning signs in our investment analysis and 2 of those don't sit too well with us...

If you are no longer interested in Brookfield Renewable, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.