Is PIF stock a buy?

National Bank Financial analyst Rupert Merer thinks there is money to be made on Polaris Infrastructure (Polaris Infrastructure Stock Quote, Chart, News, Analysts, Financials TSX:PIF).

As reported by the Globe and Mail, Merer April 17 maintained his “Outperform” rating and price target of $19.00 on PIF.

In a research update to clients April 17, the analyst summarized where the company is at currently.

“During Q4, PIF completed its first stage of optimization at Canoa I, investing $3.6-million (of $5-million),” he wrote. “The work should be completed in July and contribute $1.5-1.8-million per year to cash flow. PIF could soon move forward on adding battery storage to the project and anticipates permit approvals and other related milestones the next three to five months. Excess solar panels can be leveraged at San Jacinto to help reduce parasitic load, which could save $1.6-million per year with an increase to the net output of the plant. On M&A, PIF has two targets in the advanced stages that could be funded internally and another larger opportunity that would require external financing (likely debt) if they can reach a deal.”

Toronto-based Polaris Infrastructure is a renewable energy company with projects in Latin America

Merer said the company has some flexibility financially.

“On its year-end call, the company highlighted its net leverage will approach 2 times by the end of 2024, allowing it to add corporate debt,” he noted. “It can also add project debt to Canoa 1 to help fund battery additions. The company could also look to refinance its Nicaraguan assets, with potential to see an improvement in the interest rate and an extension of the debt amortization. If at any point PIF believes its shares represent the most compelling return potential (we estimate an implied discount rate of nearly 20 per cent), it can direct capital towards buybacks through its NCIB.”