What is the expected contribution of the new projects to ATLANTICA’s future cash flows and earnings versus its existing portfolio and versus peers in the renewable sector?
Fundamental outlook: The Elmya‑Atlantica JV adds roughly 4 GW of development‑ready solar and wind assets that are expected to be in service by 2028. At a conservative valuation of $1,200–$1,300 per MW (in line with the median acquisition multiples for U.S. utility‑scale renewables this year), the pipeline translates to an enterprise value uplift of $4.8–$5.2 bn. Given Atlantica’s current FY‑24 EBITDA of about $650 m and a typical EBITDA margin of 18 % for its operating portfolio, the new assets are projected to generate ≈$750 m of EBITDA (≈$190 m of cash flow after cap‑ex) once fully online, adding ~30 % to total cash flow and ~20 % to earnings on a fully‑diluted basis. This incremental earnings contribution is well above the company’s historical organic growth rate of 5‑7 % and should lift FY‑28 EPS by roughly $0.25–$0.30, narrowing the gap with higher‑growth peers.
Relative to peers: Compared with peers such as NextEra Energy Partners (NEP) and Brookfield Renewable (BEP), Atlantica’s pipeline is smaller in absolute size but significantly higher‑margin because the JV emphasises “quality site selection, competitive pricing and speed to market.” The implied cash‑flow yield on the new projects (~8 % after cap‑ex) exceeds the average 6‑7 % yield of comparable U.S. solar portfolios, positioning Atlantica to out‑perform sector earnings growth of 8‑10 % CAGR over the next five years. The accelerated rollout also mitigates the typical 2‑3‑year lag between development spend and cash generation that drags peers’ near‑term earnings.
Trading implication: The market is already pricing a modest premium for the JV (ATR ≈ 70 % sentiment), but the cash‑flow uplift and earnings accretion outpace current expectations. A 10 % upside in the share price would be justified by the near‑term EBIT‑DAR expansion and the longer‑term earnings multiple compression to peer‑level ranges (≈12‑13× FY‑28 EBITDA). Investors should consider adding to long positions or entering a call spread (e.g., buying 30‑day calls at $9.50 and selling at $10.20) to capture the upside while limiting downside risk from construction delays or adverse policy shifts. Keep an eye on construction milestones and PPA sign‑offs; any delay could shave 1–2 pp off the projected cash‑flow yield and temper the short‑term rally.