RWE Earnings: Raises 2023 Guidance Materially; Shares Cheap

We maintain our EUR 53 fair value estimate after no-moat RWE had to release its first-half results earlier than expected because they largely exceeded company-compiled consensus expectations, as obliged by German stock exchange regulations in this case. This has happened for the third quarter in a row. On the back of this very strong print, the firm materially raised 2023 guidance. RWE is the fourth-largest renewables firm in the U.S. and second-largest offshore wind firm. On the other hand, its combined-cycle gas turbines and trading arm highly benefit from volatile commodity prices and growing intermittency of the power generation system due to the rise in renewables output. Despite this competitive business mix, shares are materially undervalued.