SNY touched the bottom of its range in October 2023 on weak earnings and news that it would spin-off its consumer healthcare operations. The stock looks to be breaking out and while very hard to predict we think it is possible it trades in a higher new range. The drop last year was likely a one-off driven by the spin-off news, and barring a significant news item as such or consistently weak earnings, we would be surprised if it got back to the low-end of its range.
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For the quarter-ended, SES reported EPS of 12c missing estimates of 13c. Revenue (Excl oil purchase and resale) beat estimates of $333M coming in at $337M declining from $353M from the year prior. Adjusted EBITDA was $114M, declining from $119M but coming in well-ahead of forecasts of $102.15M. The comapny's CEO stated, "Strong second quarter results were driven by robust industry fundamentals, favorable weather conditions, and continued operational execution across our business units, resulting in double digit revenue growth on a same store sales basis." SES also raised its full-year adjusted EBITDA guidance and repurchased approximately 11% of outstanding shares in the quarter. The decline in revenue appears to be driven by wek industry conditions, but we think the results are fine outside of that. The adjusted EBITDA guidance raise is good to see and SES continues to be cheap at 13.5x forward earnings.
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E has doubled this year, bringing market cap to $91M. It remains cheap at 10X earnings. There has been no major news, but Q2 earnings were fine with EBITDA more than doubling and margins increasing. It got new coverage from Acumen Capital. It has leverage to large contracts. There has been some insider buying. With its small size and 35% insider ownership we do not want to underestimate its risks here, but its fundamentals look good, the balance sheet is OK and as small caps move towards $100M market cap they do tend to get more attention from investors. We would be OK owning a small position as part of an overall small cap allocation.
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Company Highlight: Northland Power Inc. (NPI)
NPI is a diversified Canadian utilities company specializing in developing offshore wind and onshore renewable energy projects. NPI was established in 1987 and is one of Canada’s first independent power producers and is now headquartered in Toronto with global offices in eight countries. NPI owns an economic interest in 3.4 GW (net 2.9 GW) of operating generating capacity and a significant inventory of early-to-mid-stage development opportunities encompassing approximately 15 GW of potential capacity. The company’s primary focus is on offshore wind, onshore renewable solar, wind, and battery storage.
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Their relationship with Pepsi isn't helping them. Shares once soared, but have fallen 63% in the last 6 months. Maybe the convenience stores are not selling as well. He doesn't trust it.