From Nasdaq: 2024-05-03 15:54:20

Shares of Brookfield Renewable Partners (NYSE: BEP) surged 4% on Friday following a 6.9% rally. The renewable energy master limited partnership beat revenue and FFO estimates, forecasting over 10% FFO growth this year. Brookfield signed a significant contract to supply Microsoft with renewable power for AI cloud computing, boosting demand for its assets.

Brookfield’s Q1 revenue rose 12% to $1.49 billion, exceeding estimates by $60 million, with FFO per share up 8% to $0.45, topping estimates by $0.03. The company cited diverse asset base and inflation-linked power purchase agreements as drivers. A landmark agreement with Microsoft to supply 10,500 megawatts for AI and cloud data centers between 2026-2030 was also highlighted.

Interest rates impact Brookfield, which relies on equity, debt, and distributions to unitholders. The stock’s 5.7% distribution yield makes it sensitive to rate changes. A softer April jobs report, with 175,000 jobs added below expectations, could ease inflation fears, potentially leading to lower interest rates. This could benefit rate-sensitive stocks like Brookfield.

Brookfield’s performance and deals with major customers like Microsoft showcase its strong track record. However, the stock is still 53% below its 2020 highs, which were set during a period of historically low interest rates. As a capital-intensive dividend stock, Brookfield’s valuation is especially influenced by interest rate fluctuations, caution is advised for potential investors.

Considerations before investing in Brookfield Renewable Partners include insight from the Motley Fool Stock Advisor team, who identified 10 best stocks for investors, excluding Brookfield. The service provides guidance on portfolio building and delivers two new stock picks monthly. Prior recommendations, like Nvidia in 2005, have seen substantial returns, emphasizing the potential for long-term growth and success in the stock market.

Disclaimer: Author Billy Duberstein has positions in Microsoft. The Motley Fool holds positions in Microsoft and recommends Brookfield Renewable Partners. Disclosure policies apply. The views expressed do not necessarily reflect those of Nasdaq, Inc.



Read more at Nasdaq: Why Brookfield Renewable Partners Rallied Today