The Canadian utilities stocks on our list are trading at a premium relative to their peers
SmallCapPower | January 22, 2018: Today we have identified four Canadian utilities stocks are trading at high EV/sales multiples. Utilities lag behind the rest of the market, as the S&P 500 Utilities index increased 3% over the past year, compared to the S&P 500’s increase of 24% and the TSX’s increase of 5%. The average EV/sales multiple of the stocks listed is 10.7x.
Innergex Renewable Energy Inc. (TSX:INE) – $14.20
Electric Utilities
Innergex is a Canada-based utilities company that operates eight projects in renewable energy fields, including solar, hydro, geothermal, and wind. These projects total ~1600 MW, and the Company plans to expand its capacity to reach 200 MW by 2020. Innergex recently acquired 100% of the outstanding shares of Alterra Power (TSX:AXY), which adds an additional ~400 MW of capacity and many additional projects in the development pipeline.
- Market Cap: $1,542.2 Million
- Enterprise Value to Sales: 13.5x
- Forward Enterprise Value to Sales (FY2018): 12.2x
- Peer Average Enterprise Value to Sales: 5.6x
- Peer Average Forward Enterprise Value to Sales (FY2018): 6.6x
Boralex Inc. (TSX:BLX) – $24.75
Electric Utilities
Boralex is a Canada-based utilities company that owns a large variety of small renewable energy projects, mostly consisting of wind turbines, across Canada, France, and the US Boralex’s projects produce 1400 MW, and plans to reach 2000 MW by 2020, in large part due to the acquisition of a 200 MW wind farm in the Niagara area.
- Market Cap: $1,887.3 Million
- Enterprise Value to Sales: 12.6x
- Forward Enterprise Value to Sales (FY2018): 10.8x
- Peer Average Enterprise Value to Sales: 5.6x
- Peer Average Forward Enterprise Value to Sales (FY2018): 6.6x
Maxim Power Corp. (TSX:MXG) – $2.67
Independent Power Producers
Maxim is a Canada-based power company that operates a 150 MW duel-fuel power plant near Grande Cache, Alberta, and sells the energy to the Alberta Electric System Operator. The Company plans to acquire more mid-range plants in the region.
- Market Cap: $145.6 Million
- Enterprise Value to Sales: 8.5x
- Forward Enterprise Value to Sales (FY2018): 22.9 x
- Peer Average Enterprise Value to Sales: 5.6x
- Peer Average Forward Enterprise Value to Sales (FY2018): 6.6x
Etrion SA (TSX:ETX) – $0.27
Independent Power Producers
Etrion is a Switzerland-based solar company operating in Japan and Chile. The Company operates 130 MW of solar farms, a 190 MW project backlog, and an additional 200 MW in the development pipeline. The Company partners with Hitachi High-Technologies Corporation (TYO:8036) to deal with Japanese entities.
- Market Cap: $90.1 Million
- Enterprise Value to Sales: 8.3x
- Forward Enterprise Value to Sales (FY2018): 8.8x
- Peer Average Enterprise Value to Sales: 5.6x
- Peer Average Forward Enterprise Value to Sales (FY2018): 6.6x
Disclosure: Neither the author nor his/her family own shares in any of the companies mentioned above.
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