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Why the Origin Energy share price is at a new 52-week high

The Origin Energy Ltd (ASX: ORG) share price has had a solid year in 2019. Strong earnings and favourable electricity pricing has seen Origin shares climb 30.85% higher this year.

Why is the Origin Energy share price rocketing higher?

The Origin share price shot 2.36% higher on Friday to $8.23 per share, before hitting a new 52-week high of $8.31 just after market open this morning. The share price has now settled back down to its current level of $8.27 per share.

The company hasn’t provided any price-moving updates since its quarterly report on 31 October 2019. However, the Origin share price has still managed to add more than 5% over that time.

Origin’s Integrated Gas revenue climbed 7 per cent year-on-year (YoY) to $688 million during the September quarter. However, the company’s Energy Markets segment saw electricity and gas sales volumes fall lower.

Electricity sales were flat quarter-on-quarter (QoQ) but down 8% YoY due to lower Business sales and lower Retail customer numbers. Natural gas volumes fell 7% YoY with a number of short-term wholesale contracts in Queensland not being renewed.

This follows Origin’s strong full-year result showing back in August. Origin’s statutory net profit after tax (NPAT) of $1.211 billion for FY2019 which represents a 333% increase on FY2018.

Underlying profit climbed 42% higher on the prior corresponding period (pcp) to $1.028 billion. Operating cash flow is up 35% to $1.325 billion, and adjusted net debt is $1.1 billion lower at $5.4 billion.

The Origin share price climbed higher after announcing a final dividend of 15 cents per share, making its full-year dividend a fully franked 25 cents per share.

It hasn’t been all smooth sailing this year for Origin, with regulatory headwinds weighing on shareholders’ minds. Origin’s Energy Markets, in particular, is facing a competitive retail market while the ACCC mulls over potential market intervention.

Is November the time to buy?

The current share price of $8.27 is continuing the Origin momentum as we head into Christmas.

On top of the strong share price growth, Origin shares are yielding a tidy 3.02% per annum. This represents better capital gains and dividend yield than competitor AGL Energy Limited (ASX: AGL).

On top of that, AGL shares are trading at 14x earnings compared to Origin’s 12x earnings at the market open.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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