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The Latest Winner in the Future Hydrogen Economy

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Hydrogen has created significant opportunity in the field of renewable energies. There's been no shortage of coverage about the fuels
 
 
The Latest Winner in the Future Hydrogen Economy

Dear Reader,

Hydrogen has created significant opportunity in the field of renewable energies. There's been no shortage of coverage about the fuels and technologies required for a carbon-free, hydrogen-based economy.

One firm that really stands out in the transition to that new economy is RWE Renewables.

The company just reported its preliminary numbers from 2020. Before we view the newest figures, let me quickly tell you more about RWE Renewables.

The Green Energy Boom

RWE Renewables is an energy giant based in Essen, Germany. The firm is currently the third-largest producer of renewable energies.

Its team wants to invest 1.5 billion to 2 billion euros annually into alternative energy systems. Their goal is to expand production capacity for wind and solar power to over 13 gigawatts by the end of 2022.

At the end of 2019, they were producing 8.7 gigawatts. This represents a Compound Annual Growth Rate (CAGR) of 13.5%.

Its U.S. subsidiary, RWE Renewables Americas, is already one of the top 10 largest onshore wind firms in the nation.

And it's investing about $1.6 billion per year into wind, solar, and storage tech. But we all know that sometimes the sun doesn't shine, and the wind doesn't blow.

Hydrogen is an energy source that never runs out of abundance and provides a wealth of ecological benefits. RWE has a very promising future in this source of energy.

Topping Expectations

Okay, let's now turn to the report.

After analyzing the preliminary results during the ongoing year-end process, RWE management announced its 2020 performance exceeded their expectations.

Energy sales surpassed estimates toward the end of the year. The adjusted EBITDA of RWE will be around 3.2 billion euros, exceeding the upper end of the projected range (2.7 billion to 3 billion euros).

RWE expects an EBITDA of 2.7 billion euros in their core business, which is higher than the original projection of 2.15 billion to 2.45 billion euros. The adjusted operative result (adjusted EBIT) is projected to reach 1.8 billion euros, above the previous expected range of 1.2 billion to 1.5 billion euros.

The adjusted net result was expected to land between 0.85 and 1.15 billion euros and may have come out to 1.2 billion in reality. The final numbers for 2020 will be released in mid-March, but the preliminary ones we have right now are certainly convincing enough.

A Solid Dividend and Entry Point

You may also like the dividend payout 0.85 euros ($1.03) per share. This figure equates to roughly 2.4% of the current price and the price developments of the past several months.
Since its COVID-related slump in March 2020, RWE stock has recovered by more than 90%.
Here is the one-year chart for RWE stock:

Source: www.aktienscreener.com/rolf-morrien

The price dropped slightly again recently, which could offer a good entry point for investors thinking long-term.

We'll talk more about hydrogen and its potential in the coming weeks. I think this is one of the untapped areas of the economy that hasn't reached its full potential. There will likely be a significant amount of interest from retail investors in 2021 and beyond. My goal is to identify the best firms that capture significant upside on this trend.
In time,
Dr. Gregor Bauer
 

© 2021 Godesburg Financial Publishing, Inc.

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