Unraveling the Future of Hannon Armstrong Sustainable Infrastructure Capital Inc (HASI): A Deep ...
Long-established in the REITs industry, Hannon Armstrong Sustainable Infrastructure Capital Inc (NYSE:HASI) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 4.67%, juxtaposed with a three-month change of -17.86%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Hannon Armstrong Sustainable Infrastructure Capital Inc.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 3/10
Profitability rank: 5/10
Growth rank: 3/10
GF Value rank: 10/10
Momentum rank: 4/10
Based on the above method, GuruFocus assigned Hannon Armstrong Sustainable Infrastructure Capital Inc the GF Score of 66 out of 100, which signals poor future outperformance potential.
Understanding Hannon Armstrong Sustainable Infrastructure Capital Inc's Business
Hannon Armstrong Sustainable Infrastructure Capital Inc, with a market cap of $2.165 billion and sales of $152.67 million, provides debt and equity financing to the energy markets in the United States. The company focuses on investments in two types of projects: energy-efficiency projects and renewable-energy projects. Energy-efficiency projects reduce the energy use and energy cost of a building or facility through the improvement or installation of building components. Renewable-energy projects deploy cleaner energy sources such as solar and wind to generate power production. The company also provides financing solutions for other projects to improve energy efficiency and the environment.
Financial Strength Breakdown
Hannon Armstrong Sustainable Infrastructure Capital Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's low cash-to-debt ratio at 0.04 indicates a struggle in handling existing debt levels. Additionally, the company's debt-to-Ebitda ratio is 9999, which is above Joel Tillinghast's warning level of 4 and is worse than 0% of 526 companies in the REITs industry. Tillinghast said in his book Big Money Think's Small: Biases, Blind Spots, and Smarter Investing that a high debt-to-Ebitda ratio can be a red flag unless tangible assets cover the debt.
Profitability Breakdown
Hannon Armstrong Sustainable Infrastructure Capital Inc's low Profitability rank can also raise warning signals. The company's Net Margin has declined over the past five years (-45.63%), as shown by the following data: 2018: 49.10; 2019: 57.64; 2020: 57.76; 2021: 58.10; 2022: 26.70; .
Growth Prospects
A lack of significant growth is another area where Hannon Armstrong Sustainable Infrastructure Capital Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -7.7 per year over the past three years, which underperforms worse than 82.57% of 631 companies in the REITs industry. Stagnating revenues may pose concerns in a fast-evolving market.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While Hannon Armstrong Sustainable Infrastructure Capital Inc has a commendable history, the current indicators suggest that it may struggle to maintain its performance in the future. Investors should consider these factors when making investment decisions.
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This article first appeared on GuruFocus.
