Two Reasons to Watch FIP and One to Stay Cautious

Over the past six months, FTAI Infrastructure’s stock price fell to $8.21. Shareholders have lost 12.6% of their capital, which is disappointing considering the S&P 500 has climbed by 6.1%. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.

Following the pullback, is now a good time to buy FIP? Find out in our full research report, it’s free.

Why Does FIP Stock Spark Debate?

Spun off from FTAI Aviation in 2021, FTAI Infrastructure (NASDAQ:FIP) invests in and operates infrastructure and related assets across the transportation and energy sectors.

Two Things to Like:

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, FTAI Infrastructure grew its sales at an incredible 51.1% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

2. Projected Revenue Growth Is Remarkable

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.

Over the next 12 months, sell-side analysts expect FTAI Infrastructure’s revenue to rise by 31.1%, an improvement versus its 18.1% annualized growth for the past two years. This projection is eye-popping and indicates its newer products and services will spur better top-line performance.

One Reason to be Careful:

Cash Burn Ignites Concerns

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

FTAI Infrastructure’s demanding reinvestments have drained its resources over the last four years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 65%, meaning it lit $65.02 of cash on fire for every $100 in revenue.

Final Judgment

FTAI Infrastructure has huge potential even though it has some open questions. After the recent drawdown, the stock trades at 4.2× forward EV-to-EBITDA (or $8.21 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

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