OPAL Fuels Inc. (NASDAQ: OPAL)

Sector: Utilities Industry: Utilities - Regulated Gas CIK: 0001842279
Market Cap 72.40 Mn
P/B 9.68
P/E 106.00
P/S 0.22
ROIC (Qtr) 0.33
Div Yield % 0.00
Rev 1y % (Qtr) -0.82
Total Debt (Qtr) 353.55 Mn
Debt/Equity (Qtr) 47.27
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About

OPAL Fuels Inc., known by its stock symbol OPAL, operates in the renewable energy sector, specifically focusing on the capture and conversion of biogas into low-carbon intensity renewable natural gas (RNG) and Renewable Power. The company is a leader in marketing and distributing RNG to heavy-duty trucking and other hard-to-decarbonize industrial sectors. OPAL Fuels' primary business activities involve the development and operation of Biogas Conversion Projects. These projects capture and convert biogas from landfills and dairy farms into RNG and...

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Investment thesis

Bull case

  • Healthy cash reserves of 31M provide 2.77x coverage of short-term debt 11.21M, demonstrating strong liquidity position and minimal refinancing risk.
  • Tangible assets of 862.14M provide exceptional 102.91x coverage of deferred revenue 8.38M, showing strong service capability backing.
  • Long-term investments of 230.82M provide solid 0.67x coverage of long-term debt 342.33M, indicating strategic financial planning.
  • Robust tangible asset base of 862.14M provides 21.92x coverage of working capital 39.32M, indicating strong operational backing.
  • Operating cash flow of 41.13M provides strong 4.91x coverage of deferred revenue 8.38M, indicating service delivery capability.

Bear case

  • Operating cash flow of 41.13M barely covers its investment activities of (117.94M), with a coverage ratio of -0.35, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 31M provide limited coverage of acquisition spending of (7.61M), which is -4.07x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 52.80M relative to inventory of 12.08M (4.37 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of (73.36M) provides weak coverage of capital expenditures of 114.50M, with a -0.64 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of 41.13M provides minimal -1.13x coverage of tax expenses of (36.29M), suggesting potential tax planning inefficiencies or unsustainable tax positions.

Peer comparison

Companies in the Utilities - Regulated Gas
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ATO Atmos Energy Corp 28.99 Bn 23.20 5.95 9.63 Bn
2 NI Nisource Inc. 14.62 Bn 27.48 3.16 16.21 Bn
3 UGI Ugi Corp /Pa/ 8.33 Bn 13.88 1.13 7.21 Bn
4 NJR New Jersey Resources Corp 5.43 Bn 16.61 2.52 3.97 Bn
5 BKH Black Hills Corp /Sd/ 5.38 Bn 18.44 2.33 4.70 Bn
6 SR Spire Inc 5.36 Bn 19.83 2.09 5.35 Bn
7 SWX Southwest Gas Holdings, Inc. 5.04 Bn 19.06 1.48 3.51 Bn
8 OGS ONE Gas, Inc. 4.50 Bn 29.67 3.07 3.40 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.41 0.79
EV to Cash from Ops. EV/CFO 9.13 18.36
EV to Debt EV to Debt 1.06 1.86
EV to EBIT EV/EBIT -2,145.62 -126.33
EV to EBITDA EV/EBITDA 19.00 11.96
EV to Free Cash Flow [EV/FCF] EV/FCF -5.12 -73.99
EV to Market Cap EV to Market Cap 5.19 1.71
EV to Revenue EV/Rev 1.14 3.19
Price to Book Value [P/B] P/B 9.68 2.59
Price to Earnings [P/E] P/E 106.00 77.08
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.07 1.42
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 47.06
Dividend per Basic Share Div per Share (Qtr) 0.00 1.78
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 54.25
Interest Coverage Int. cover (Qtr) -0.01 3.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -21.31 -16.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 45.67 44.73
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.03
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -99.87 6.88
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -54.93 113.90
EBIT Growth (1y) % EBIT 1y % (Qtr) -100.69 26.96
EBT Growth (1y) % EBT 1y % (Qtr) -489.87 12.44
EPS Growth (1y) % EPS 1y % (Qtr) -88.89 24.35
FCF Growth (1y) % FCF 1y % (Qtr) -152.78 -146.22
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -2.51 10.16
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.36 0.36
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.12
Cash Ratio Cash Ratio (Qtr) 0.37 0.15
Current Ratio Curr Ratio (Qtr) 1.47 0.94
Debt to Equity Ratio Debt/Equity (Qtr) 47.27 3.58
Interest Cover Ratio Int Coverage (Qtr) -0.01 3.17
Times Interest Earned Times Interest Earned (Qtr) -0.01 3.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 6.80 32.74
EBIT Margin % EBIT Margin % (Qtr) -0.05 21.43
EBT Margin % EBT Margin % (Qtr) -7.64 13.06
Gross Margin % Gross Margin % (Qtr) 31.40 43.32
Net Profit Margin % Net Margin % (Qtr) 0.20 9.98