Shares of Orsted (CSE:ORSTED), a leading offshore wind developer, took a significant hit this Friday following the New York State Public Service Commission's decision to deny offshore wind developers the ability to raise electricity prices. The decision, which also affects companies such as BP (NYSE:BP) and Equinor, has imposed financial strain on several offshore wind projects.
According to InvestingPro, Orsted's market cap stands at $19.331 billion, with a P/E ratio of 12.21, reflecting a low earnings multiple, as noted in the InvestingPro Tips. Despite the recent setbacks, the company has a history of raising its dividend for seven consecutive years, a positive signal for investors seeking stable returns.
The commission's move comes at a time of heightened inflation, supply chain disruptions, and increased capital costs due to rising interest rates. They emphasized that contract modifications would lead to inflated consumer bills. This ruling has particularly impacted Sunrise Wind, a partnership between Orsted and Eversource designed to power close to 600,000 homes.
David Hardy, CEO of Orsted's America's division, expressed his disappointment at this outcome. "We need to reevaluate our next steps," he said in response to the commission's decision.
Adding to Orsted's troubles, the company recently flagged potential impairments of up to $2.26 billion linked to three wind projects off the U.S. east coast. These impairments are due to supply delays and an absence of tax credits, further compounding the company's financial challenges.
InvestingPro data shows the company experienced a 42.76% decrease in the 3-month price total return, and the price is currently at 52.7% of its 52-week high. Despite this, Orsted remains a prominent player in the Electric Utilities industry, as noted by InvestingPro Tips.
Investors may find value in the company's resilience and potential for future growth. As per InvestingPro's fair value estimate of $57.97, the stock may present a buying opportunity at its current price. For more insights like these, consider subscribing to InvestingPro's premium service, which offers additional tips and real-time metrics on companies like Orsted. For more details, visit InvestingPro Pricing.
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