Is Origin Energy stock 'worth more'?

Could this stock keep powering higher?

| More on:
Worker inspecting oil and gas pipeline.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Origin Energy Ltd (ASX: ORG) stock price has climbed 14% in three months. That compares to a 3.3% rise for the S&P/ASX 200 Index (ASX: XJO).

Despite the company's rise, some people believe the ASX energy share can keep climbing.

The Origin Energy stock price has suffered in the last three months of 2023 after the takeover attempt by Brookfield was denied by shareholders, including AustralianSuper.

More gains to come?

AustralianSuper built a large stake in the business and was influential in blocking the takeover going ahead.

Some investors were focused on the issue of the environment – would the planet be better off if Origin was under the control of Brookfield or remained a listed business? AustralianSuper's CEO Paul Schroder was quoted by The Australian saying the following:

We had some really good engagement with (Origin). But I do want to call out some behaviour which was despicable.

For people to say that funds who have one view or another were either 'wreckers'
of the environment or not, or some other spurious kinds of things that were talked
about.

We're investors, we think it's a great company with great assets and good management. We think it's worth more. That's it.

AustralianSuper is convinced that Origin will play a "significant role" in the energy transition.

It may cost many billions to get Australia to net zero over the decades, but Origin could be one of the key contributors.

Schroder then said:

I think we (AustralianSuper) and Brookfield think exactly the same about how
much it's worth, and they just had a view about how much they could get it for,
basically.

We have a very strong conviction about the future of that company.

How valuable is Origin Energy stock?

Ultimately, it's up to each investor to decide what the ASX energy share is worth.

Brookfield was trying to buy Origin for $9.39 per share. That's currently 3% higher than where it is right now, which isn't much of a possible rise, though AustralianSuper thinks it's worth more.

According to the estimates on Commsec, the Origin Energy stock price could be valued at just 11 times FY25's estimated earnings.

The business will need to balance profitability with investing in renewable energy. There's a large opportunity for big players, but I think there are a number of other ASX shares that aren't as capital-intensive and more attractive.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

Worker inspecting oil and gas pipeline.
Opinions

Here's where I see the Woodside share price ending 2024

I think the Woodside share price is poised for a 2024 rebound.

Read more »

A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant
Energy Shares

Here's how the Santos share price is responding to today's production results

Santos reported its quarterly production and revenue results today.

Read more »

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Energy Shares

Should you buy the 10% dip on this ASX 300 uranium stock?

Could big returns be on the cards for buyers of this stock? Let's see what analysts are saying.

Read more »

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles as the Whitehaven Coal share price rises today
Broker Notes

1 ASX 200 energy stock with 'minimal competition' to buy right now

This stock is trading 30% lower than its 2022 record high.

Read more »

A miner in visibility gear and hard hat looks seriously at an iPad device in a field where oil mining equipment is visible in the background.
Energy Shares

Oil price spikes on Iran's attack. Now what?

The oil price remains near six-month highs as the world awaits Israel’s response to Iran’s drone and rocket attack.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Energy Shares

Why is the New Hope share price sinking on Monday?

What's going on with this coal miner's shares?

Read more »

A miner in visibility gear and hard hat looks seriously at an iPad device in a field where oil mining equipment is visible in the background.
Energy Shares

2 ASX 200 energy stocks to buy for oil and uranium exposure

Analysts think these energy stocks could offer decent upside for investors.

Read more »

Happy man standing in front of an oil rig.
Energy Shares

Broker says Woodside share price weakness is a buy opportunity

Now could be a buying opportunity for investors according to Wilsons.

Read more »