Latest news with #OctopusRenewables
Yahoo
19-05-2025
- Business
- Yahoo
Shareholders in Octopus Renewables Infrastructure Trust (LON:ORIT) are in the red if they invested three years ago
As an investor its worth striving to ensure your overall portfolio beats the market average. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Octopus Renewables Infrastructure Trust plc (LON:ORIT) shareholders, since the share price is down 36% in the last three years, falling well short of the market return of around 20%. Contrary to the longer term story, the last month has been good for stockholders, with a share price gain of 9.9%. However, this may be a matter of broader market optimism, since stocks are up 5.3% in the same time. So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). During the three years that the share price fell, Octopus Renewables Infrastructure Trust's earnings per share (EPS) dropped by 36% each year. In comparison the 14% compound annual share price decline isn't as bad as the EPS drop-off. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in. The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers). This free interactive report on Octopus Renewables Infrastructure Trust's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further. When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Octopus Renewables Infrastructure Trust's TSR for the last 3 years was -22%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments! It's good to see that Octopus Renewables Infrastructure Trust has rewarded shareholders with a total shareholder return of 14% in the last twelve months. And that does include the dividend. Notably the five-year annualised TSR loss of 1.3% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Octopus Renewables Infrastructure Trust better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Octopus Renewables Infrastructure Trust (of which 1 makes us a bit uncomfortable!) you should know about. If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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.
Telegraph
08-05-2025
- Business
- Telegraph
Energy volatility remains a substantial concern, but this trust offers a way to profit
Questor is The Telegraph's stock-picking column, helping you decode the markets and offering insights on where to invest. Energy costs have been at the forefront of investors' minds since the invasion of Ukraine by Russia in early 2022 led to extreme volatility in power prices. However, while it spurred a cost of living crisis, there have also been ways to benefit from higher energy prices and inflationary forces. Octopus Renewables Infrastructure Trust (ORIT) invests in renewable generation assets, such as solar and wind, which are characterised by long-term revenues generated from the sale of electricity, while often also benefiting from government subsidies under schemes designed to support the transition to a lower-carbon power network. Fluctuations in power prices and renewable resources can result in revenue variation outside of the company and manager's control but this can be mitigated through power price hedging arrangements, and partially offset by those same subsidy revenues, which are typically not linked to the price of power. ORIT launched in late 2019 and has since developed its portfolio to one split roughly equally between wind and solar, with additional investments in renewable energy project developers and a small stake in a battery storage project. While small, the investments in project developers offers ORIT preferential access to significant project pipelines. The trust is derisked through its diversification, with a good spread across Europe but retains a home bias, with the UK representing 42pc of its invested capital. Combined with the variety of technologies the managers invest in, shareholders receive greater certainty of returns and reduced revenue volatility. Investment manager Octopus Energy Generation is one of the largest renewable energy investors in Europe, with £6.8bn of assets under management at the end of last year. This is spread across more than 4.5GW of capacity across 18 countries, meaning ORIT benefits from a scale of resource significantly larger than its market capitalisation would otherwise imply. Exposure to construction assets has been a key component of ORIT's strategy since launch, and a source of differentiation versus peers, generating £16m of equity growth for shareholders through value appreciation as assets are de-risked from construction to operational status. The company follows a progressive dividend policy, and since launch ORIT has successfully grown target dividends in line with inflation, while keeping these affordable. Dividends for FY24, for example, were 1.24x covered after the scheduled debt principal repayments that took place during the year. The board again expects dividends for FY25 to be fully covered, supported by the level of fixed revenue over the coming years, with 84pc of the portfolio's forecast revenue over the 24 months to end-March 2027 fixed or contracted. Additionally, the portfolio benefits from inflation linkage, helping to drive dividend growth over time, with almost half of the portfolio's forecast revenues over the 10 years to end-March 2035 benefiting. ORIT's manager has also proven its expertise in structuring accretive long-term power purchase agreements (PPAs) with high-quality counterparties. The trust has recently upgraded its share buyback programme, tripling its scheme from £10m to £30m to be returned to investors, as a result of its recent £161m of asset disposals. This disposal activity did not stop the company successfully growing both revenues and Ebitda in the year to end-December 2024, to £132m and £86m, respectively – despite below average solar and wind resource generated during the year. ORIT has recently highlighted at least a further £80m of disposals during the remainder of 2025, which paves the way for further potentially significant catalysts during 2025 and builds upon what has already been a successfully executed capital recycling programme. The trust is scheduled to hold its first continuation vote at its AGM next month, following the fifth anniversary of the company's IPO, and the board has been assessing the existing portfolio and investment strategy in order to target further growth opportunities while maintaining a fully covered progressive dividend. Additionally, the board is reviewing the company's fee arrangements. Despite the progress the company has made under its capital recycling programme and the underlying portfolio's fundamental performance, ORIT's share price today trades at a 33pc discount. This is wider than comparable peers, where similar listed infrastructure investment companies focused on renewable generation assets trade around a peer group weighted average discount of 30pc. ORIT offers investors an attractive and highly competitive dividend yield of 9pc and meets our key criteria for a core pick within infrastructure investment companies: a low-risk portfolio with an attractive total return profile alongside fully covered and growing dividends. This column sees ORIT's discount as excessively wide on an absolute basis and relative to peers, failing to recognise the portfolio's fundamental performance, the progress the company has made and the further actions the company has flagged for later this year.
