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.
Rising interest could lead to an increase in networks' allowed returns in future regulatory periods, implying upside to the guidance.
The rationale of the deal with RWE is poor, owing to full exposure to networks and retail. The former is very capital-intensive while the latter is damped by fierce competition and spiraling energy costs that are challenging to pass through.
|
Metric
|
EOAN
|
IBE
|
CNA
|
|---|---|---|---|
Price/Earnings (Normalized) | 8.47 | 15.76 | 3.75 |
Price/Book Value | 2.27 | 1.66 | 1.85 |
Price/Sales | 0.34 | 1.51 | 0.28 |
Price/Cash Flow | 30.93 | 7.27 | 3.33 |
|
Metric
|
EOAN
|
IBE
|
CNA
|
|---|---|---|---|
Quick Ratio | 0.52 | 0.60 | 1.07 |
Current Ratio | 0.81 | 0.77 | 1.44 |
Interest Coverage | 0.88 | 4.98 | 21.27 |
|
Metric
|
EOAN
|
IBE
|
CNA
|
|---|---|---|---|
Return on Assets (Normalized) | 2.55% | 4.79% | 7.66% |
Return on Equity (Normalized) | 19.94% | 14.40% | 59.36% |
Return on Invested Capital (Normalized) | 7.33% | 7.51% | 24.74% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
IBDSF
| Iberdrola SA | — | Pzs | $77.4 Bil | |
IBDRY
| Iberdrola SA ADR | YW | Lqg | $76.8 Bil | |
ESOCF
| Enel SpA | Mfclshv | Tlxt | $66.2 Bil | |
ENLAY
| Enel SpA ADR | Ltnvwzxv | Jmvq | $66.2 Bil | |
SRE
| Sempra | Zwhjpvrj | Rbgtzh | $45.2 Bil | |
ENGIY
| Engie SA ADR | — | Vlglp | $41.3 Bil | |
ENGQF
| Engie SA | — | Lvz | $40.9 Bil | |
ENAKF
| E.ON SE | — | Vwxn | $34.8 Bil | |
EONGY
| E.ON SE ADR | Kzbfhmcxv | Zpy | $34.7 Bil | |
AES
| The AES Corp | Lbwdbwrq | Vydx | $11.9 Bil |
