2018 accretive acquisitions adding to financial metrics
Good day everyone,
We are initiating coverage on Infrastructure and Energy Alternatives, Inc. (NASDAQ: IEA), a company that offers design, site development, construction, installation, and restoration of infrastructure services for the renewable energy sector.
Current price $2.99 per share
Renewable energy is a hot sector and investments in the space aren’t slowing down, they are growing significantly. We searched the sector to find a potential value stock and we discovered Infrastructure and Energy Alternatives, Inc.
IEA is a major player in renewable energy.
IEA became a public company In March 2018. In the second half of last year the company made two accretive acquisitions. IEA acquired CCS (Consolidated Construction Solutions) and William Charles Construction Group. These were big acquisitions that have added significantly to the company’s top line (2018 revenues were up over 70% from the prior year) but there were costs associated with the acquisitions and those costs have impacted the bottom line.
Consequently, the shares have moved from a high of $11.27 to the current price of $2.99 per share, creating the potential for a value opportunity. IEA could absorb the remaining expenses associated with the acquisitions in the near term. Their Q2 ended June 30th and if the bottom line has improved, the potential for a significant catalyst is there.
Before the acquisitions, IEA generated 88% of its revenue from wind energy projects. The diversification afforded by last year’s acquisitions has dropped the IEA reliance on wind projects to 42% of revenue.
On July 1st the company announced two new wind energy awards valued at about $150 million. One award was to build a 272-megawatt project in Willacy County, Texas to provide enough energy to power up to 77,000 average Texas homes. The other award is in Scurry County, Texas, and will be a 242-megawatt project capable of powering up to 65,500 homes. The two projects could avoid over 500,000 metric tons of carbon emissions.
At the close of Q1, on March 31st IEA had a backlog of $2.2 billion.
IEA operates the following companies:
IEA CONSTRUCTORS
WHITE CONSTRUCTION
WHITE ELECTRICAL CONSTRUCTORS
H.B. WHITE CANADA
SAIIA
AMERICAN CIVIL CONSTRUCTORS (ACC)
IEA, through the companies listed above, offers design, site development, construction, installation, and restoration in the wind, solar, thermal, petrochemical, biomass, heavy civil and power delivery.
Almost 70% of the outstanding shares are held by 67 institutional investors.
Company Guidance: For the full year 2019, the company anticipates revenues in the range of $1.0 billion to $1.2 billion and Adjusted EBITDA to be in the range of $90 million to $110 million.
It was just 90 days ago the IEA shares were trading at double the current price and 16 days since the shares consolidated to their low of $1.81 per share. Investors may be taking a second look at IEA shares as they have seen nice gains over those 16 days.
We anticipate significant volatility in IEA shares in the near term as investors move the share price higher toward their potential value, with profit taking pauses along the way.
So do your due diligence and see if you can also find value in these shares.
The Traders News Group
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