Good Energy’s attractive valuation set to be reinforced by full-year results

Good Energy is scheduled to release full results on 26th March, and investors can look forward to another year of growth supported by increased customer numbers and the delivery of its strategy to make Good Energy an end-to-end energy services company.

Good Energy supplies its customers with 100% renewable energy generated from a base of around 2,000 UK-based clean energy generators. However, Good Energy is far from just an energy supplier.

- Advertisement -

Having identified consumer demand for the full suite of energy services and taking steps to divest its generation assets, the company has established a vertically integrated business model that services households through all stages of energy consumption.

Vertically integrated household energy services

In addition to supplying energy, the company provides environmentally conscious households with heat pumps, EV chargers, smart meters, and home batteries to store electricity generated from solar power. Good Energy also installs solar panels and facilitates the sale of excess energy back to the grid through the company’s smart export tariffs.

Vertical integration of household clean energy services affords Good Energy a competitive advantage that is integral to winning customers and creating shareholder value. As part of its strategy to become an end-to-end supplier of energy services, Good Energy has recently acquired one heat pump company and two solar installation companies to bolster the rollout to new customers.

Providing customers with solutions that help them generate, store, and even supply energy back to the grid has made Good Energy a one-stop shop that will, over time, help the shares command a higher valuation. Recent acquisitions in the sector and the value attributed to organisations with a diversified energy supply and storage model demonstrate this.

Increasing customer base

- Advertisement -

Good Energy has successfully grown its customer base, and new customer numbers will be in focus in the group’s upcoming results. The company has identified a total addressable market of 900,000 households it plans to target over the next two years which equates to up to a £10 billion market opportunity.

After recently launching Smart Export and Solar Savings propositions to 40,000 customers as of the end June 2023, the company said it expects to increase this to 75,000 by the end of the year. Should this be achieved, Good Energy will be a major player in the space. This is a major focus for Good Energy in the coming years.

The UK challenger energy company sector is certainly exciting, and Good Energy is one of the most exciting companies in it, both in terms of growth prospects and the opportunity for investors.

The group’s revenue jumped 45.6% to £156.1m in the first half of 2023 and profit after tax soared to £12.0m. EBITDA was £14.9m.

Anecdotal evidence of customer satisfaction from review sites and recognition by the industry press should not be overlooked. The company has a 4.8 Trust Pilot rating which significantly exceeds most of its competitors, by some margin. Good Energy has been ranked at the top of Which’s green energy rankings for three years in a row.

In a trading statement released last year, the company said trading head been ahead of expectations in the ten months to the end of October.

Should the company achieve a similar level of EBITDA growth in the second half as it did in the first half, it will trade at an attractive valuation given its current £57m market cap. Good Energy’s full-year results are set to value the company on an EV/EBITDA basis significantly below that of recent transactions in the space.

Good Energy shares have rallied this week, arguably in anticipation of a strong set of full-year results.

Latest News

Subscribe to the UK Investor Magazine email newsletter

Register for our free email newsletter and receive the latest investment news, podcasts, event information and offers.

More Articles Like This

Tagdiv Cloud library - template content.