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Why Hannon Armstrong Stock Soared 31% in November

By Beth McKenna - Dec 5, 2020 at 11:54AM

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Shares of this renewable energy-focused REIT have gained 71% so far in 2020.

What happened

Shares of Hannon Armstrong Sustainable Infrastructure Capital ( HASI 1.84% ), a real estate investment trust (REIT) focused on renewable energy and other climate change solutions, surged 30.6% in November, according to data from S&P Global Market Intelligence.

For context, the S&P 500 returned 11% last month.

Solar and wind energy farms with body of water in background.

Image source: Getty Images.

So what

We can probably attribute Hannon Armstrong's powerful performance last month to several factors, including the strength of the overall market.

Moreover, shares likely got a tailwind from the result of the U.S. presidential election. The general market view is that a Democratic administration under President-elect Joe Biden will be more favorable than the current administration for the renewable energy space. 

In addition, on Nov. 5, Hannon Armstrong's stock rose 6.3% following the company's release of third quarter results that pleased investors. Revenue increased 25% year over year to $48.6 million, primarily driven by a larger portfolio and a change in the mix of assets being securitized, the company said. Its "core," or non-generally accepted accounting principles (GAAP), earnings per share (EPS) edged down to $0.36, from $0.38 in the year-ago period. Still, this result easily beat the $0.31 that analysts had been expecting.

Moreover, management increased its full-year 2020 guidance. It now expects that its core EPS "will exceed the previously communicated guidance midpoint of $1.43, reflecting 2018 to 2020 annual core EPS growth above the midpoint of the 2% to 6% from the 2017 baseline."  

Now what

Hannon Armstrong is worth watching as it's in a business with significant growth potential. That said, shares have run up 70.8% this year through Dec. 4, so they may have gotten overly frothy relative to the company's fundamentals.

The stock's dividend yield is about 2.6%, as of Friday's market close.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Hannon Armstrong Sustainable Infrastructure Capital, Inc. Stock Quote
Hannon Armstrong Sustainable Infrastructure Capital, Inc.
$58.18 (1.84%) $1.05

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