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  5. NPI: Good morning. [Northland Power Inc.]
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Investment Q&A

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Q: Good morning. I've held NPI for a number of years and recent weakness has brought prices down to my cost base. A new analyst report from National Bank considers the stock to be undervalued and I'm considering increasing my holdings. I already own BEP.UN.? Your opinion on a price rebound for NPI.
Thanks.
Asked by richard on January 10, 2024
5i Research Answer:

Unlike other some other utilities names, NPI’s leverage level is a bit better: currently, the net debt/EBITDA is around 5.0x (high but okay with industry averages). Shares have been weak due to a decline in revenue and profitability, which was magnified by a higher interest rates. If revenue recovers, we think NPI could experience decent upside potential. Regardless, lower interest rates should help the shares anyway. Overall, NPI has a cheap valuation (EV/EBITDA is the lowest in years), and has a decent dividend well-covered by cash flow. Analysts do expect a very big earnings recovery this year, and if the company can execute on this the shares will follow. It is not our favourite but does look better after its 31% decline over the past year.