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Endesa is an integrated utility operating in power production, distribution, and supply in the Iberian Peninsula. Parent company Enel owns 70.1% of its shares.
Stock Analyst Note

European utilities have reversed their outperformance in the fourth quarter of 2023 because of a fall in wholesale power prices in the wake of gas prices after a very mild winter, and a pickup in interest rates due to inflation receding more slowly than expected. The former led to some of the companies, most exposed to power prices, cutting their guidance for 2024.
Stock Analyst Note

We confirm our EUR 22.40 fair value estimate after no-moat Endesa released 2024 results below its guidance and confirmed its 2024-26 targets. As expected, the firm will pay a EUR 1 dividend on 2023 results, implying a 6% yield. Shares are materially undervalued due to full exposure to the adverse Spanish regulatory backdrop and the recent fall in wholesale power prices. Yet, we see limited downside on the regulatory front after the extension of the energy levy announced in late December. Further, Endesa's sensitivity to falling wholesale power prices is below most peers due to its short position.
Stock Analyst Note

European utilities are up by 14% year to date, slightly underperforming the broader European markets. Since the end of September, the sector strongly outperformed thanks to the rally in government bonds and solid third-quarter results that drove multiple guidance upgrades although growth slowed down from the second quarter due to higher comps. All in all, companies that are the most exposed to commodity prices are set to exceed their 2022 record profits in 2023. Meanwhile, firms with big retail businesses that were hit by a margin squeeze because of the energy crisis in 2022 will post a significant rebound in earnings.
Stock Analyst Note

No-moat Endesa held its annual capital markets day. In line with parent company Enel on Nov. 22, Endesa announced that it aims to be free cash flow-positive over 2024-26 whereas the previous 2023-25 plan involved releveraging the firm. This strategic shift from the new top management of Enel looks sensible to us against a backdrop of high interest rates. On the downside, the firm unexpectedly cut its 2023 earnings guidance after confirming it on Oct. 31. Endesa also trimmed its 2024 earnings and dividend guidance while setting its 2026 guidance in line with our estimate. All in all, we confirm our EUR 22.30 fair value estimate and see the shares as undervalued.
Stock Analyst Note

We retain our EUR 22.30 fair value estimate after no-moat Endesa reported nine-month results hit by a gas supply loss and stated that it will reach the upper end of its 2023 guidance. Shares are undervalued. The firm will hold its annual capital market day on Nov. 23. Current guidance calls for a 2023 dividend of EUR 1 versus EUR 1.59 for 2022. We expect a EUR 1.17 dividend based on a 73% payout and implying a 6.5% yield. Still, there is a chance that Endesa will pay a higher dividend than guided, in line with what it did over the last three years.
Stock Analyst Note

European utilities have underperformed the European market by 4% year to date with most of the underperformance occurring in the third quarter because of the rise in interest rates. This overshadowed strong second-quarter results driven by the easing of the energy crisis, persisting commodity price volatility, and the hedging improvement. These drivers have persisted in the third quarter. Moreover, some power price clawbacks expired at the end of June like in Germany and Belgium. On the flip side, the comparison basis will be tougher as of the third quarter.
Stock Analyst Note

We retain our EUR 22.30 fair value estimate after no-moat Endesa reported good first-half results and conservatively confirmed its 2023 guidance. Shares have been sold off after left-wing parties did better than expected at the Spanish general elections in July 2023, implying the possibility that they could keep control of the parliament. Still, our long-term estimates are based on conservative power price assumptions of EUR 60 per megawatt-hour, meaning that an extension of the EUR 67/MWh clawback on hydro and power producers would have no impact. Shares are undervalued.
Stock Analyst Note

We retain our EUR 22.30 fair value estimate after no-moat Endesa reported strong earnings rebound in the first quarter, albeit anticipated by FactSet consensus, and conservatively kept its 2023 guidance. This publication confirms our stance that the latter should be exceeded, since market gas and power prices have fallen below the group's assumptions—supporting an integrated margin above the guidance. Shares are still a bit undervalued.
Stock Analyst Note

We maintain our EUR 22.30 fair value estimate after no-moat Endesa released 2022 net income slightly above FactSet consensus and net debt above guidance. The firm intends to pay a EUR 1.59 dividend on 2022 results, 11% higher than 2021 and above EUR 1.5 guidance due to high 2022 net income. This implies a juicy yield of 8.6%. Due to the expected normalization of profits, the group guides for a 2023 dividend of EUR 1, implying a 5.4% yield. However, the group has been paying a higher dividend than planned for three years in a row. This could still be the case in 2023. Shares are undervalued.
Stock Analyst Note

No-moat Endesa lowered its 2023-24 net income and dividend targets on the looming Spanish windfall tax. The downside to our 2023 and 2024 estimates will be offset by the upside to our 2022 and 2025 ones, so we confirm our EUR 22.30 fair value estimate. Shares appear undervalued.
Stock Analyst Note

We maintain our EUR 22.30 fair value estimate after no-moat Endesa released strong nine-month results and confirmed its 2022 guidance despite the booking of a high provision related to the 1.2% tax on energy companies' turnover being mulled by the Spanish government. Shares are materially undervalued.
Stock Analyst Note

As the energy crisis deepens, an emergency meeting between European Union energy ministers will be held on Sept. 9. A key topic will be the implementation of a power price cap to funnel nongas power producers' windfall profits to consumers. According to the Financial Times, the European Commission is mulling a cap of EUR 200 per megawatt-hour.
Stock Analyst Note

We maintain our EUR 22.30 fair value estimate after no-moat Endesa released a good set of first-half results and confirmed its 2022 guidance. Shares are undervalued because of the company's full exposure to Spanish regulations. The government recently announced a windfall tax on energy companies of around EUR 2 billion annually. Yet, outright power generation is already capped at EUR 65/megawatt-hours and publication of Endesa and Iberdrola earnings show power producers don't generate windfall profits. Consequently, we don't expect the windfall tax to have a significant impact on Endesa and its peers.
Stock Analyst Note

We maintain our fair value estimate of EUR 22.30 per share after no-moat Endesa released first-quarter results below FactSet consensus but confirmed its 2022 guidance. Shares are undervalued because of the company's full exposure to Spanish regulations. However, the impact of the measures recently adopted to limit the impact of soaring energy prices on households looks limited for Endesa.

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