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EDP Renovaveis SA EDPR

Morningstar Rating
€12.73 −0.10 (0.78%)
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Company Report

Deep Undervaluation of Renewables Developers Sparks M&As; Catalysts Ahead for Neoen and Orsted

On April 1, The Australian Financial Review reported that no-moat Neoen hired Bank of America to sell 30% of its Australian business with a price tag of $1.6 billion. This spurred an 8.5% rally in the shares between April 2 and April 5. The $1.6 billion that was reported implies a whopping valuation of EUR 2.4 million per megawatt of installed capacity versus EUR 1.1 million/MW implied in our fair value estimate. All in all, the reported price implies a gross valuation premium (before any taxes on capital gains) of EUR 2.8 per share or 9% of our fair value estimate. We confirm our fair value estimate of EUR 31.50 for Neoen. Due to its young asset base and suitability for a takeover, stemming from its shareholder structure, it's the least undervalued pure renewables developer we cover.

Price vs Fair Value

EDPR is trading within a range we consider fairly valued.
Price
€12.83
Fair Value
€13.00
Uncertainty
Medium
1-Star Price
€55.78
5-Star Price
€55.40
Economic Moat
Lnss
Capital Allocation
Bdclkmps

Bulls Say, Bears Say

Bulls

As one of the leading renewable players in the US, EDP Renovaveis is well positioned to benefit from the Inflation Reduction Act.

Bears

Declining European wholesale power prices will weigh on earnings as of 2024.

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News

Trading Information

Previous Close Price
€12.83
Day Range
€12.4813.05
52-Week Range
€11.9120.91
Bid/Ask
€12.56 / €12.76
Market Cap
€13.04 Bil
Volume/Avg
988,090 / 963,548

Key Statistics

Price/Earnings (Normalized)
79.41
Price/Sales
5.84
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

EDP Renovaveis, a 71%-owned subsidiary of integrated Portuguese utility EDP, was created in 2007. It builds, develops, and operates renewables plants, mostly wind and solar. With 16.6 GW of net installed capacity at the end of 2023, EDP Renovaveis is the fourth-largest renewables player in the world and the third-largest in the US and Europe. The group’s plants are mainly located in the US, Spain, Portugal, Poland, and Brazil.
Sector
Utilities
Industry
Utilities - Renewable
Stock Style Box
Mid Growth
Total Number of Employees
3,076

Competitors

Valuation

Metric
EDPR
RWE
ENGI
Price/Earnings (Normalized)
79.4114.262.58
Price/Book Value
1.200.761.27
Price/Sales
5.840.840.47
Price/Cash Flow
20.1034.663.30
Price/Earnings
EDPR
RWE
ENGI

Financial Strength

Metric
EDPR
RWE
ENGI
Quick Ratio
0.470.670.76
Current Ratio
0.661.580.99
Interest Coverage
1.852.962.31
Quick Ratio
EDPR
RWE
ENGI

Profitability

Metric
EDPR
RWE
ENGI
Return on Assets (Normalized)
1.08%3.84%2.61%
Return on Equity (Normalized)
2.97%14.38%17.34%
Return on Invested Capital (Normalized)
3.35%7.64%8.47%
Return on Assets
EDPR
RWE
ENGI
See how this stock stacks up to its competitors with Morningstar Investor

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