SSE Share Price Forecast September 2021 – Time to Buy SSE?
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Shares of multinational energy company SSE (LSE: SSE) are in the red today, closing at 1594p as of September 28th (17:52 UTC+1). SSE has one of the best renewable energy companies at the moment, heavily involved with the UK wind power sector. As reported before, activist investor Elliott Management is pushing for a separation of the energy group’s renewables business, which has seen the share price move.
SSE – Technical Analysis
According to the financial statement produced by SSE, the market cap of the company is at £17.194 billion with total assets worth £21.592 billion. Revenue for 2020 was at £6.83 billion with a profit margin of 33.34% compared to £6.80 billion in 2019. The underlying operating profit at SSE’s renewables division increased to £731.8 million, with £294.3 million in the division.
Oscillators for SSE such as Stochastic RSI Fast (3, 3, 14, 14)(0.0), Williams Percent Range (14)(−93.0), Bull Bear Power(−53.6) and Ultimate Oscillator (7, 14, 28)(36.5) are neutral. On the other hand moving averages are mostly pointing towards a sell action such as Exponential Moving Average (30)(1625.7), Simple Moving Average (30)(1639.9), Exponential Moving Average (50)(1607.4) and Simple Moving Average (50)(1598.4).
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Recent Developments
SSE has one of the largest renewable energy portfolios in Ireland and Britain, which includes the world’s largest offshore wind farm at Dogger Bank, Scotland’s deepest offshore wind farm at Seagreen, and one of Europe’s largest onshore wind farms at Viking. It has performed well ahead of BP and other major oil companies when it comes to transitioning its business model and has recently sold its residential energy business to Ovo Energy. The company, which has always been a dividend king currently yields 5%. SSE is being punished because it is part of sluggish FTSE 100 and it was involved in providing electricity to consumers, which was a low-margin business. With the company focusing on leaner renewables, the shares can very well surge in the near future.
SSE already generates around 4GW of wind and hydropower with future plans to treble its output by 2030. It offers its customers the option to upgrade to Go Green 100% renewable energy tariff to support its long-term ambition of achieving net-zero emissions by 2050.
SSE is a different renewable energy stock from the rest because of its ability to combine the growth potential of renewables with the steady cash flow from its regulated networks business. The management is pushing back against activist investor Paul Singer’s Elliott Investment Management breakup of SSE into its regulated electricity and renewable divisions. It has already planned to deploy £7.5 billion into green energy projects by 2030, some of which will be supported by government subsidies.
Should You Buy SSE Shares?
SSE pays a reliable dividend of 5% which it plans to maintain till 2023. But there are certain risks that investors should consider. SSE’s prices are limited by the OFGEM which has allowed a price cap increase of £139 this year. However, SSE will be scrutinized if it decides to move forward with price hikes during the current economic turbulence.
The company’s ability to return cash to its investors may be hampered by additional regulation in the already highly regulated utility industry. An increase in interest rates may also prompt an increase in the cost of the company’s debt which would eat into its profits. Regardless of all the above points, SSE would still act as excellent foundation stock for any portfolio consisting of renewable energy investments. At current prices, investors should add SSE to their portfolios.
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