The Tilt Renewables Ltd (ASX: TLT) share price has remained unchanged at $2.30 per share despite announcing a 253% increase in underlying earnings after tax this morning.
What were the full-year highlights?
Tilt reported a 14% increase on prior corresponding period (pcp) to 2,054 gigawatt hours (GWh) which saw revenue increase 22% on pcp to $193.3 million in the year.
Generation costs also increased by 21%, however a decrease in corporate/development costs saw the company record a 30% increase in earnings before interest, tax, depreciation, amortisation and other financial items (EBITDAF) to $134.8 million for the year.
However, net profit after tax (NPAT) fell 28% to $12.2 million despite the 253% increase in underlying earnings after tax once net fair value gains/losses on financial instruments are stripped out which reflects the difficult hedging environment in the Energy sector.
The company will not pay a final dividend, down from $1.80 per share last year, meaning the full-year dividend is simply the $1.60 interim dividend announced in the first half.
Why didn't the Tilt share price react to the result?
For Tilt it's not so much a matter of should, but if, you can buy the stock given its current shareholder base.
Tilt currently has a market cap of over $1 billion but is tightly controlled by Mercury NZ Ltd (ASX: MCY) and Infratil Limited (ASX: IFT), with a combined ownership of over 85%.
The company is extraordinarily illiquid for such a large company and regularly goes long periods with zero trading volume on the ASX, with today being no exception.
While I believe that Tilt and fellow renewable energy stocks on the ASX could surge higher in the next 3-5 years, particularly if a renewables-friendly Labor and/or Greens government were to be elected in May, the illiquidity risk is a bit too rich for my liking.
As a growth investor, I'd be wanting to see significant outperformance over peers to be purchasing such an illiquid stock and at present, I'm not sure there's a compelling case to buy Tilt shares.
In the meantime, Fools should consider this buy-rated stock that could soar higher in 2019 as it tries to capture a piece of the $22 billion cannabis industry.
