Boralex (BLX:TSE) Fundamental Valuation Report

Boralex (BLX:TSE) Fundamental Valuation Report

Fundamental Valuation Report

Boralex(BLX:TSE)

Utilities:Utilities – Renewable

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$43.56 (CAD) 04/16/2021

Weighted Valuation
$44.16 (CAD)

Overall Rating
Fairly valued to slightly Undervalued by 1.4%

Valuation Models Comparables: $43.45 (CAD)
(in order of importance) Multiples: $41.55 (CAD)
Discounted Cash Flow: $47.49 (CAD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $54.00 this stock is Undervalued

Company Overview (BLX:TSE CAD)

Price 43.56
Range 42.41 – 44.12
52 week 26.15 – 55.59
Open 43.20
Vol / Avg. 10.48M/1.48M
Mkt cap 4.47B
P/E 79.20
Div/yield 0.66/0.02
EPS 0.55
Shares 102.62M
Beta 0.59

Company Description

Boralex Inc is an electric utility company involved in the development, construction, and operation of renewable energy power facilities. The company controls a portfolio of electricity producing plants that utilize wind, hydroelectric, thermal, and solar fuel sources. Most of Boralex’s plants rely on wind power, while a significant number also employ hydroelectric power. The company generates the vast majority of its revenue from the sale of energy through long-term contracts to customers in Canada, France, and the United States. Boralex’s wind and hydroelectric power stations, located in Canada and France, account for most of this revenue. The company’s facilities in Canada and France are also responsible for most of the company’s total power production.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for BLX:TSE

Using a discounted cash flow model we generated an intrinsic value of $47.49 (CAD) for BLX:TSE

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

BLX:TSE Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $47.49 1% 5% 1% 5%
WACC (or Ke) 4.54 $65.71 $35.87
Terminal Growth Rate 0.00 $36.62 $64.51
Tax Rate 0.08 $51.38 $43.61
Cash Flow 536,368,088 $42.22 $52.77
Capital Expenditures -208,000,000 $45.66 $49.33
Long Term Debt 1,598,971,000 $48.27 $46.71

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $28.55 (CAD) for BLX:TSE. We also generated a valuation of $43.45 (CAD) using other metrics and comparables.
The comparable companies were TransAlta Renewables (RNW:TSE), Innergex Renewable Energy (INE:TSE), Algonquin Power (AQN:TSE), Northland Power (NPI:TSE) and Brookfield Renewable (BEPC:TSE).

Company BLX:TSE End Date Value
Earnings/Share $0.55 (CAD)
Book Value/Share $9.64 (CAD)
Sales/Share $6.42 (CAD)
Cash Flow/Share $3.67 (CAD)
EBITDA/Share $4.16 (CAD)
Price Based on Comps Adjustment Factor (%)
$17.27 (CAD) 0.0
$42.17 (CAD) -8.0
$39.85 (CAD) -36.4
$12.92 (CAD) -36.0
$63.39 (CAD) 13.8
BLX:TSE Ratios Used Average Values RNW:TSE INE:TSE AQN:TSE NPI:TSE BEPC:TSE
79.20 PE Ratio 31.40 57.54 0.00 11.75 24.91 0.00
4.52 PB Ratio 4.38 2.38 4.05 1.92 6.72 6.81
6.79 PS Ratio 6.21 12.29 6.50 5.42 4.26 2.59
11.87 PCF Ratio 13.94 20.06 16.95 17.99 6.64 8.07
19.43 EV to EBITDA 15.26 18.75 20.41 11.05 10.81 0.00

Multiples

Using a multiples approach we generated a valuation of  $41.55 (CAD) for BLX:TSE

Company BLX:TSE End Date Value
Earnings/Share $0.55 (CAD)
Book Value/Share $9.64 (CAD)
Sales/Share $6.42 (CAD)
Cash Flow/Share $3.67 (CAD)
EBITDA/Share $4.16 (CAD)
Price Based on Comps Adjustment Factor
$56.36 (CAD) 0
$24.65 (CAD) 0
$26.21 (CAD) 0
$32.60 (CAD) 0
$67.90 (CAD) 0
Ratios Ratio Average
PE Ratio 102.48
PB Ratio 2.56
PS Ratio 4.09
PCF Ratio 8.89
EV to EBITDA 16.34

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  BLX:TSE for the last 10 years was  2.31

We ran the Adjusted Book Value for  BLX:TSE and generated a book value of  $9.64 (CAD)
By multiplying these we get an adjusted valuation of  $22.28 (CAD)

Analyst Data

In the Stockcalc database there are 11 analysts that provide a valuation for BLX:TSE. The 11 analysts have a concensus valuation for BLX:TSE for 2021 of $54.00 (CAD).

BLX:TSE Boralex

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
5 2 0 4.2727 Outperform 2021-4-15

Current Price: 43.56 CAD

Analyst Consensus
CAD Millions 2021 2022 2023
Mean EPS 0.70 0.82 1.37
# EPS Analysts 9 9 2
Mean Revenue 729.70 757.90 828.10
# Revenue Analysts 9 9 2
Mean Target Price 54.00
Mean Cash Flow 3.77 3.97 4.75
Mean EBITDA
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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