Tuesday, October 15, 2013

Seeking Alpha: EnerNOC Looks Undervalued, But Mind The Risks

It feels as though almost anything related to the U.S. electricity market never manages to work out quite as well as hoped or advertised. Independent power producers like Calpine (CPN) have had their struggles, as have metering technology companies like Itron (ITRI), and the complex interplay of regulation (environmental and otherwise), utility business models, energy demand, and other factors has made for a pretty challenging operating environment.

So too for EnerNOC (ENOC). On one level, what EnerNOC does should be pretty simple. Utilities don't really want to build new plants, nor do they want to use expensive peaking plants any more than necessary, and there's more "slack" in power demand than commonly realized. As an intermediary between businesses and utilities, EnerNOC can help both sides - utilities can get the demand reduction they need and businesses can get paid to curtail their demand during peak periods. What's more, there's theoretically billions of dollars in helping enterprises better plan and manage their power/efficiency needs.

Of course it's never that simple. Between an ever-changing regulatory environment and the year-to-year uncertainties of auctions within its largest operating region, EnerNOC has had some huge swings in the market. I do believe these shares are undervalued today, and that management's plan to diversify and grow the business will bear fruit, but I also believe that this is likely to remain a risky situation with above-average volatility for the foreseeable future.

Please read more here:
EnerNOC Looks Undervalued, But Mind The Risks

No comments: