Northland Power (TSX:NPI): Assessing Valuation After S&P/TSX Preferred Share Index Addition

Northland Power (TSX:NPI) was just added to the S&P/TSX Preferred Share Index. This move often brings a company onto the radar of institutional investors and can prompt portfolio adjustments for index-tracking funds.

See our latest analysis for Northland Power.

Momentum is building for Northland Power following its inclusion in the S&P/TSX Preferred Share Index and steady dividend announcements, which have contributed to a 10.5% increase in its 1-month share price return. While recovery is underway, the stock’s 1-year total shareholder return of 18.5% only partially reverses losses from the past three and five years, reflecting both renewed investor optimism and ongoing caution regarding the company’s long-term track record.

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With recent gains and strong dividend announcements, investors may wonder if Northland Power is still undervalued with room to grow. Alternatively, the market may already be factoring in its future prospects, which could mean there is little upside for new buyers.

Most Popular Narrative: 9.6% Undervalued

With Northland Power’s most-followed valuation narrative setting fair value at CA$27.46, the last close of CA$24.83 looks attractively positioned. This gives investors an immediate sense that upside remains if the bold growth and margin forecasts come to pass.

The imminent commissioning of Hai Long (Taiwan) and Baltic Power (Poland), which will together add over 2 GW of gross capacity and diversify Northland's offshore wind exposure geographically, aligns with robust long-term government decarbonization mandates and strong policy support across Europe and Asia. As these large projects reach commercial operation, they are expected to drive significant step-changes in EBITDA and revenue growth.

Read the complete narrative.

Curious what dramatic revenue and profit leaps analysts are baking into this price target? The real story hides in aggressive expansion, higher margins, and a profit turnaround rarely seen in utilities. Uncover the surprising forecast at the heart of this valuation.

Result: Fair Value of $27.46 (UNDERVALUED)

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

However, persistent low offshore wind output or policy and permitting setbacks could quickly challenge the positive outlook for Northland Power’s next phase of growth.

Find out about the key risks to this Northland Power narrative.

Build Your Own Northland Power Narrative

Prefer your own angle or want to see how the numbers tell a different story? You can explore the data and build a personal narrative in just a few minutes: Do it your way

A great starting point for your Northland Power research is our analysis highlighting 2 key rewards and 2 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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