Northland Power Still a Buy, says M Partner’s Safrance

On Wednesday, Northland Power (TSX:NPI) announced its Q1, 2012 results.

Revenue of $100.6-million was an improvement over last year’s $96.2-million, but the company’s earnings slipped to $49.69-million from $55.3-million in Q1, 2011.

M Partners analyst John Safrance says the results were in line with his expectations, causing him to to tweak his expectations of this year’s numbers only slightly, while the impact on his long term view of Northland was not materially changed. In a morning note to clients today, Safrance reiterated his $19.50 target and buy recommendation on the stock.

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Founded in 1987, Toronto-based Northland Power spent much of its public life, which began a decade later, as an income fund. The company converted to a publicly listed corporation on the first day of 2011. Back in the eighties, Northland’s first renewable energy project was tackling the waste problem of a mill in Cochrane, Ontario. The result was was the first Canadian thermal plant to use unprocessed wood chips as fuel. Northland has since established interests solar, wind energy generation, biomass and run-of-river projects that collectively generate more than a thousand megawatts of power.

Safrance says his valuation on Northland is based on thirteen times his EV to 2015’s EBITDA forecast, discounting an estimated 6.5% for the weighted average cost of capital. The M Partners analyst believes the company’s revenue will climb to more than $586-million by fiscal 2015.

Share of Northland Power closed today down .7% to $17.58.

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