Is There Now An Opportunity In Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI)?

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI), which is in the reits business, and is based in United States, saw a decent share price growth in the teens level on the NYSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Hannon Armstrong Sustainable Infrastructure Capital’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Hannon Armstrong Sustainable Infrastructure Capital

What’s the opportunity in Hannon Armstrong Sustainable Infrastructure Capital?

Hannon Armstrong Sustainable Infrastructure Capital is currently overpriced based on my relative valuation model. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 47.66x is currently well-above the industry average of 38.22x, meaning that it is trading at a more expensive price relative to its peers. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Hannon Armstrong Sustainable Infrastructure Capital’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Hannon Armstrong Sustainable Infrastructure Capital?

NYSE:HASI Past and Future Earnings, January 19th 2020
NYSE:HASI Past and Future Earnings, January 19th 2020

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. With profit expected to grow by 64% over the next couple of years, the future seems bright for Hannon Armstrong Sustainable Infrastructure Capital. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? HASI’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe HASI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on HASI for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for HASI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Hannon Armstrong Sustainable Infrastructure Capital. You can find everything you need to know about Hannon Armstrong Sustainable Infrastructure Capital in the latest infographic research report. If you are no longer interested in Hannon Armstrong Sustainable Infrastructure Capital, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.