HA Sustainable Infrastructure Capital (HASI) has secured a new US$2.25b unsecured revolving credit facility and a US$400m senior unsecured term loan, both tied to CarbonCount sustainability metrics and replacing prior lending arrangements.

Despite the new US$2.65b in credit capacity, HA Sustainable Infrastructure Capital’s recent share price performance has cooled, with the 30 day share price return down 3.39% and the 90 day share price return down 9.48%, even as the year to date share price return is 19.14% and the 1 year total shareholder return is 40.62%. This hints that longer term holders have seen stronger momentum than very recent buyers.

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After a strong 1 year run but softer recent returns, the question around HA Sustainable Infrastructure Capital is simple: has most of the re rating already played out, or does the current valuation still leave meaningful upside on the table?

Preferred P/E of 89.8x: Is it justified for HA Sustainable Infrastructure Capital?

HA Sustainable Infrastructure Capital is currently on a P/E of 89.8x, which looks rich when set against its last close at $37.91 and the wider US Diversified Financial industry.

The P/E ratio compares the share price to earnings per share and is often used as a quick read on how much investors are willing to pay for each dollar of current earnings. For a company like HA Sustainable Infrastructure Capital, which is focused on energy efficiency, renewable energy and other sustainable infrastructure investments in the US, a high P/E can reflect expectations for stronger profit growth or a business model that investors regard as more resilient or differentiated.

Here, the P/E of 89.8x is described as expensive versus the industry average of 15.1x and also versus an estimated fair P/E of 19.1x. This is a level the market could move towards if sentiment or expectations cool. The same P/E is also flagged as expensive compared to a peer average of 10.1x, which underlines how far HA Sustainable Infrastructure Capital sits above many of its closest listed comparables.

Result: Price-to-earnings of 89.8x (OVERVALUED)

However, the high 89.8x P/E for HA Sustainable Infrastructure Capital could be vulnerable if revenue or net income growth slows, or if sentiment toward sustainable infrastructure weakens.

Another View on HA Sustainable Infrastructure Capital’s Valuation

While the 89.8x P/E makes HA Sustainable Infrastructure Capital look expensive versus peers, the SWS DCF model presents a different perspective. The stock is trading at $37.91 compared to an estimated future cash flow value of $53.02, or about a 28.5% discount. Which lens deserves more weight in your process?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out HA Sustainable Infrastructure Capital for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this mix of upbeat and cautious signals around HA Sustainable Infrastructure Capital leaves you undecided, check the full picture quickly and weigh both sides with 3 key rewards and 3 important warning signs

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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.