Is Brookfield Renewable Partners stock a buy?

It’s been a rough ride for fans of Brookfield Renewable Partners (Brookfield Renewable Partners Stock Quote, Charts, News, Analysts, Financials TSX:BEP.UN), whose stock has drifted south over the past two-plus years. But whether the drop in share price translates into a buying opportunity remains unclear.

Part of the Brookfield Asset Management group of companies, Brookfield Renewable own and operates renewable power assets and trades on the TSX under the ticker BEP.UN and on the New York Stock Exchange under the ticker BEP.

The stock, which pays a sizeable dividend, had a huge run-up during the stretch between 2019 and 2021, more than doubling in value during that time. But since early 2021, BEP.U has been trending downward, going from about $60 per share in 2021 to now around $40. 

Founded back in 1999, Brookfield Renewable Power became Brookfield Renewable Energy Partners in 2011, which coincided with a broadening of its focus beyond hydroelectricity. The company now has hydro, wind, utility-scale solar and storage assets in North America, South America, Europe and Asia, with about 25,700 megawatts of installed capacity and a further development pipeline of 126,000 megawatts of renewable power. 

Brookfield is one of many companies in the renewable energy space that should benefit from a worldwide turn towards renewable power in the face of climate change. Industries from aviation to automobile and manufacturing to consumer products are making commitments to become carbon neutral in the next 20-30 years, while governments are pouring billions into programs to up their renewable energy power. The United States passed the Inflation Reduction Act last year, for example, which contains $43 billion in tax credits for renewable energy companies and programs, including electric vehicles and solar panels.

BEP is also looking to grow by M&A, as the market for assets is improving.

“For the first time in a few years, we’re beginning to see a number of very attractive opportunities to buy operating assets at very value — very attractive value entry points. So, I would say that’s probably the biggest dynamic in terms of what we’re seeing change in our pipeline,” said Brookfield CEO Connor Teskey in the company’s first quarter 2023 earnings call in May.

For its Q1, Brookfield generated funds from operations of $275 million or $0.43 per unit, which was up 13 per cent on a per unit basis from a year earlier. 

“We had an excellent start to the year with strong financial performance, representing the progression to higher run-rate earnings as our investments in new generation and commercial initiatives come online. We were also successful in our growth activities, signing transactions for almost $8 billion of equity investment alongside our institutional partners,” said the company in a press release.