Engie Earnings: 2024 Guidance Raised, 2026 Set Well Above Expectations; Shares Cheap

We maintain our EUR 18 fair value estimate after no-moat Engie released 2023 results in line with company-compiled consensus, raised its 2024 recurring net income guidance by 10%, trimmed its 2025 outlook by 5%, and set its 2026 forecast well above our and consensus expectations due to higher profits from Global Energy Management & Sales. Engie will pay a EUR 1.43 dividend on 2023 results for a 9.8% yield. Applying the midpoint of the 65%-75% expected payout range to the bottom end of 2024 guidance points to a dividend of EUR 1.22 for an 8.4% yield, which reflects the shares' material undervaluation as the market has overreacted to the recent decline in wholesale power prices.