• Investors may be wondering if HA Sustainable Infrastructure Capital at around US$40.65 is still offering value after a strong run, or if most of the opportunity has already been priced in.
• The stock has pulled back slightly in the short term, with the price falling 1.4% over the last week and 4.4% over the last month. It still shows returns of 27.7% year to date, 68.5% over 1 year, 92.0% over 3 years and 1.8% over 5 years.
• Recent coverage has focused on the company’s role in sustainable infrastructure financing, with investors paying close attention to how its portfolio lines up with long term trends in clean energy and efficiency. At the same time, the stock’s multi year returns have kept it on the radar of investors who track income oriented and infrastructure related businesses.
• Simply Wall St currently gives HA Sustainable Infrastructure Capital a valuation score of 3 out of 6. The next sections compare different valuation approaches, then finish with a broader way to think about what this score means for you.

Approach 1: HA Sustainable Infrastructure Capital Excess Returns Analysis

The Excess Returns model looks at how much profit a company can generate above its estimated cost of equity, then converts that into a per share value. Instead of focusing on cash flows, it asks whether each dollar of equity in the business is expected to earn more than investors require as compensation for risk.

For HA Sustainable Infrastructure Capital, the model uses a Book Value of $19.21 per share and an Average Return on Equity of 16.56%. That translates into a Stable EPS of $3.64 per share, based on weighted future Return on Equity estimates from 6 analysts. Against a Cost of Equity of $1.99 per share, this implies an Excess Return of $1.66 per share. The Stable Book Value input is $22.00 per share, based on estimates from 5 analysts.

Combining these inputs, Simply Wall St arrives at an intrinsic value of $52.12 per share under the Excess Returns framework. Compared with the recent share price of about $40.65, this points to an implied discount of roughly 22.0%. Under this model, the stock screens as undervalued.

Result: UNDERVALUED

Our Excess Returns analysis suggests HA Sustainable Infrastructure Capital is undervalued by 22.0%. Track this in your watchlist or portfolio, or discover 46 more high quality undervalued stocks.

Approach 2: HA Sustainable Infrastructure Capital Price vs Earnings

For profitable companies, the P/E ratio is a straightforward way to relate what you pay for each share to the earnings that support that price. It gives you a quick sense of how many dollars of share price you are paying for each dollar of current earnings.

What counts as a “normal” or “fair” P/E depends on how quickly earnings are expected to grow and how risky those earnings appear. Higher growth and lower perceived risk can justify a higher P/E, while slower growth or higher risk usually call for a lower one.

HA Sustainable Infrastructure Capital is trading on a P/E of 96.29x. That stands well above the Diversified Financial industry average of 17.58x and the peer average of 9.34x. Simply Wall St’s proprietary Fair Ratio for the stock is 18.30x, which reflects factors such as the company’s earnings profile, industry, profit margins, market cap and risk characteristics. This Fair Ratio can be more informative than a simple comparison with peers or the broad industry because it is tailored to the company’s specific fundamentals. Comparing the current P/E of 96.29x with the Fair Ratio of 18.30x suggests the stock screens as overvalued on this metric.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your HA Sustainable Infrastructure Capital Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so this is where Narratives come in as a simple, structured way to link your view of HA Sustainable Infrastructure Capital to concrete numbers.

A Narrative is your story for the company, backed by your assumptions about fair value and future revenue, earnings and margins, instead of just relying on a single metric like P/E in isolation.

On Simply Wall St’s Community page, millions of investors use Narratives to connect a company’s story to a financial forecast and then to a fair value. They can then compare this with the current share price to help decide whether the stock looks attractive or expensive for their goals.

Because Narratives on the platform update as new information such as news or earnings is released, your view of HA Sustainable Infrastructure Capital can shift in real time. One investor might set a higher fair value based on more optimistic revenue and margin assumptions, while another sets a lower fair value based on more cautious forecasts for the same stock.

Do you think there's more to the story for HA Sustainable Infrastructure Capital? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.