Ryan IrvineTwo points. Irvine only recommends a half dozen stocks each year. And the fact that we're even having a conversation comparing us to NPI is a clear sign that GRN is rapidly moving onto investors' radar. GLTA
Our second YSOT came from a listener asking us to compare two renewable stocks; Greenlane Renewables Inc. (GRN:TSX) and Northland Power Inc. (NPI:TSX). Northland is global power producer dedicated with a long history of developing, building, owning and operating clean and green power infrastructure assets and is a global leader in offshore wind. Whereas, Greenlane is a smaller niche company which provides biogas upgrading systems that are helping decarbonize natural gas. Aaron takes a look at each business and their value propositions at current prices. Question Via Youtube:
What’s your take comparing Northland power vs Greenlane Renewables Inc which has a better future growth?
Northland Power Inc. (NPI: TSX)
Price: $40.70
Market Cap: $9.2 billion
Yield: 2.9%
Northland Power is a global power producer. Founded in 1987, Northland has a long history of developing, building, owning and operating clean and green power infrastructure assets and is a global leader in offshore wind. Northland owns or has an economic interest in 3.2 GW (net 2.8 GW) of operating generating capacity and a significant inventory of early to mid-stage development opportunities encompassing approximately 4 to 5 GW of potential capacity. Northland’s share price is down about 20% from its highs in February.
Greenlane Renewables (GRN: TSX)
Price: $1.60
Market Cap: $237 million
Yield: 0%
Greenlane Renewables is a provider of biogas upgrading systems that are helping decarbonize natural gas. With over 30 years industry experience, patented proprietary technology, and over 125 biogas upgrading systems sold into 19 countries worldwide. Greenland became a publicly traded company in November of 2018. Greenlane’s share price has sold off from its highs in February of this year; down about 40%.
| FINANCIAL COMPARISON |
| Northland | Greenlane |
| Second Quarter 2021 · Sales decreased 5% to $408 million from $429 million in 2020 · Adjusted EBITDA decreased 10% to $203 million from $227 million in 2020. · Adjusted Free Cash Flow per share decreased 47% to $0.10 from $0.19 in 2020. · 2021 Financial Guidance Update: revised guidance downwards to free cash flow per share of the range to $1.60 to $1.70 (formerly $1.80 to $2.00). · Total debt of $6.6 billion and cash of $864 million. Full Year 2020 · Revenue increased 24%, adjusted EBITDA increased 19% and adjusted FCF per share increased 6%. | Second Quarter 2021 · Record revenue of $12.6 million, an increase of 200% over the $4.2 million reported in the second quarter of 2020. · Adjusted EBITDA of $0.1 million. · Sales order backlog of $41.9 million as at June 30, 2021. · Sales pipeline valued at over $800 million as at June 30, 2021. · Cash and cash equivalents of $36.5 million and no debt. Full Year 2020 · Revenue increased 147% and adjusted EBITDA was a loss of $1.7 million. |
Conclusion:
Northland and Greenlane are two very different companies and aside from both operating in the renewables space, they really are not directly comparable.
Northland is obviously the much more established company. It has a history of very aggressive development of new projects. This results in fluctuations in profitability. Over time the cash flow per share does tend to increase and the dividend should be sustainable. The debt leverage is on the high end but Northland produces revenue and cash flow based on long-term contracts so they a high level of visibility with respect to future financial performance.
Greenlane is much more speculative and development stage. Its not profitable and or cash flow positive. This would mean that it would not pass KeyStone’s investment criteria which requires profitability from current operations. The balance sheet is very strong with net cash and the revenue growth is impressive. This isn’t something that KeyStone would ever recommend but someone looking for a speculative growth stock in the renewables space could give it a more in-depth look.
Visibility would be far less from Greenlane.