TerraForm Power Inc (NASDAQ:TERP) has been fetching a lot of interest and attention from big shareholders recently, however younger sister-firm TerraForm Global Inc (NASDAQ:GLBL) has been quite ignored, leading it to stay potentially undervalued. With the recent decline in stock bringing it back below $3.60, the shares are once again trading considerably below liquidation value, marking a lucrative entry level for risk-tolerant shareholders.
While it’s usually best to evaluate a stock’s value depending on the firm’s discounted future cash flow, but in numerous instances, a balance sheet assessment can uncover bargains following investor pessimism. In the event of TerraForm Global, the shares price is presently trading below $3.60, that is less than 50% of the firm’s last book value of about $8 per share.
This discrepancy can be accredited to some good reasons. TerraForm Global last submitted financial report over a year earlier. Following the bankruptcy of parent firm SunEdison, it has failed to file any 10-K or 10-Q filings since its 3Q2015 report. Many things have changed since then, and they can’t know for certain what the firm’s present book value is until it starts submitting its financials. Yet an assessment of the firm’s periodic updates suggests that the value continues to be higher than $3.50 a share.
In the past 12 months, the only data investors have obtained about Terraform Global’s current businesses has come via periodic investor updates. The firm has expanded its overall portfolio of solar and wind plants from 677 MW a year ago to a projected 947 MW today. Depending on the latest submission, it was noted that unrestricted cash has declined to $678 million, while total debt was $1,112 million as of close of October 2016.
TerraForm Global’s net of debt has declined by nearly $371 million in the past year. The firm used almost $66 million to compensate for portfolio expansion, which indicates that net equity may have declined by nearly $305 million in the past year.