SunEdison (SUNE, Financial) is confident of an upbeat performance in 2015. The company’s transformational efforts paid off delivering solid across key financial. However, it did end the fourth quarter short by about 470 MW under construction. However, this doesn’t matter to SunEdison much as with its geographic diversity, the company is seeing solid growth opportunities in the emerging markets. SunEdison thinks that its growing reputation as a renewable energy company will further help it to perform better in the coming quarters. It is seeing positive signs from different segments Let us look at these aspects.
Growth drivers to consider
The power industry is also growing, and the recent improvement in the power industry should contribute well to SunEdison’s growth. Besides this, the company is pleased to know the positive impact that it is seeing with the soft oil prices. The lower oil prices have affected many companies, and they are showing near signs of recovering. However, SunEdison should not worry about this as its robust portfolio clearly helps it to discard the myth that people have that lower price of oil can affect the global energy demand. Instead, the oil prices have no clear correlation with lower/higher demand for power generation. This is indeed a positive sign, and SunEdison can further explore certain opportunities in the lower oil price environment as well.
TerraForm Power is a fruitful initiative by SunEdison. The company is expecting it to keep on contributing well to lift its financial performance with the passing quarters. Under this strategic initiative SunEdison already earned $5 billion also including about $2.7 billion for SunEdison shareholders in the recently reported quarter. This initiative brings further bright opportunities for SunEdison which it thinks will have a positive impact on its performance and growth.
A strong pipeline
There is a solid backlog pipeline too that further help SunEdison to improve its performance. Greater the backlogs greater cash will be driven. The company has a backlog of 2.6 gigawatts up over 1 gigawatt on a gross basis. This is a solid growth prospect for SunEdison which will further solidify its position in the market. In addition, the company will be looking for more acquisitions. It is pleased with the First Wind Platform which has created a strong platform for it. The company is planning to add various add-ons to it to make it more beneficial.
However, the acquisition has helped SunEdison acquire an incremental 1.6 GW of PTC enabled turbines for approx $160 million. This fact is expected to drive additional growth in its future backlogs leading to a strong long term prospect pipeline.
Conclusion
Now moving to the fundamentals, the company doesn’t have a trailing P/E and forward P/E as it has been going through difficult times. However, the current levels are impressive. The stock is trading close to its 52-week high and with the success of its acquisitions, the company is expected to attract more investors leading to growth in market share. However, the stock may fall in the upcoming quarters as its earnings are growing for the next five years with a CAGR of just 1.58% as compared to industry average of 15.47%. Considering the valuation levels, I would like to suggest the investors to see investment in SunEdison from sideline.
