Stock Analysis

Even though Atlantica Sustainable Infrastructure (NASDAQ:AY) has lost US$452m market cap in last 7 days, shareholders are still up 73% over 5 years

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NasdaqGS:AY
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It hasn't been the best quarter for Atlantica Sustainable Infrastructure plc (NASDAQ:AY) shareholders, since the share price has fallen 23% in that time. But at least the stock is up over the last five years. In that time, it is up 29%, which isn't bad, but is below the market return of 52%.

Since the long term performance has been good but there's been a recent pullback of 13%, let's check if the fundamentals match the share price.

However if you'd rather see where the opportunities and risks are within AY's industry, you can check out our analysis on the US Renewable Energy industry.

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During five years of share price growth, Atlantica Sustainable Infrastructure moved from a loss to profitability. On the other hand, it reported a trailing twelve months loss, suggesting it isn't reliably profitable. So we might find other metrics can better explain the share price movements.

In fact, the dividend has increased over time, which is a positive. It could be that the company is reaching maturity and dividend investors are buying for the yield.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
NasdaqGS:AY Earnings and Revenue Growth September 30th 2022

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. So it makes a lot of sense to check out what analysts think Atlantica Sustainable Infrastructure will earn in the future (free profit forecasts).

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Atlantica Sustainable Infrastructure, it has a TSR of 73% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

Atlantica Sustainable Infrastructure shareholders are down 20% over twelve months (even including dividends), which isn't far from the market return of -20%. The silver lining is that longer term investors would have made a total return of 12% per year over half a decade. If the stock price has been impacted by changing sentiment, rather than deteriorating business conditions, it could spell opportunity. It's always interesting to track share price performance over the longer term. But to understand Atlantica Sustainable Infrastructure better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Atlantica Sustainable Infrastructure , and understanding them should be part of your investment process.

We will like Atlantica Sustainable Infrastructure better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

What are the risks and opportunities for Atlantica Sustainable Infrastructure?

Atlantica Sustainable Infrastructure plc owns, manages, and invests in renewable energy, storage, natural gas and heat, electric transmission lines, and water assets in the United States, Canada, Mexico, Peru, Chile, Colombia, Uruguay, Spain, Italy, Algeria, and South Africa.

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Rewards

  • Trading at 63.5% below our estimate of its fair value

  • Earnings are forecast to grow 49.86% per year

  • Earnings have grown 14.1% per year over the past 5 years

Risks

  • Shareholders have been diluted in the past year

View all Risks and Rewards

Share Price

Market Cap

1Y Return

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Further research on
Atlantica Sustainable Infrastructure

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About NasdaqGS:AY

Atlantica Sustainable Infrastructure

Atlantica Sustainable Infrastructure plc owns, manages, and invests in renewable energy, storage, natural gas and heat, electric transmission lines, and water assets in the United States, Canada, Mexico, Peru, Chile, Colombia, Uruguay, Spain, Italy, Algeria, and South Africa.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation6
Future Growth3
Past Performance0
Financial Health4
Dividends3

Read more about these checks in the individual report sections or in our analysis model.

Very undervalued with adequate balance sheet.