This energy software provider is seeing increasing earnings estimates.
EnerNOC (ENOC)
from Canaccord Genuity Research
We expect EnerNOC (ENOC) to be a strong performer in 2014 as the theme of “Big
Data” and related enterprise solutions comes to the electricity sector. We look for investor interest to broaden as the company’s Energy Intelligence Software (EIS) strategy gains traction (helping to narrow a significant valuation discount vs. relevant peers).
The company had a solid start to the year (higher than expected sales on polar vortex), as the EIS software platform is upgraded, international expansion continues, and M&A bolsters the portfolio. Notably, enterprise software customers increased ~33% q/q to 800 as traction continues to build.
Guidance for 2014 is tweaked slightly higher, with revs/adjusted Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) at $450-465M/$72-76M and pro forma (PF) EPS at $1.28-1.40. Free cash flow (FCF) is expected at ~$50M. Next catalyst is PJM (power grid) auction May 23rd (results).
Our estimates adjust to reflect reported results and recent investments: 2014 GAAP estimates to $462.5/$0.43 (from $445M/$0.50), 2015 to $510M/$0.54 (from $510M/$0.77).
Our $30 target is based on a ~1.4x Enterprise Value (EV)/Sales, ~7.4x EV/adj EBITDA and 16.7x PE multiple (notable discounts vs. peer group) on our 2015 adjusted estimates.
John Quealy and Chip Moore, Canaccord Genuity Research, www.canaccordgenuity.com, 617-371-3711, May 8 2014