We confirm our GBX 2,200 fair value estimate after no-moat SSE narrowed its fiscal 2024 adjusted EPS guidance from above GBX 150 to a GBX 152 to GBX 160 range, bang in line with our GBX 156 estimate and involving a P/E of 10 reflecting the material undervaluation of the shares.
SSE's exposure to regulated networks and renewables provide a hedge against rising interest rates. While higher interests could dampen renewables projects' value, they could drive higher allowed networks' returns in future regulatory periods.
The dividend rebase does not solve the investment funding problem given the different investment profiles of networks and renewables assets.
|
Metric
|
SSE
|
IBE
|
RWE
|
|---|---|---|---|
Price/Earnings (Normalized) | 10.51 | 15.76 | 14.14 |
Price/Book Value | 2.24 | 1.66 | 0.76 |
Price/Sales | 1.55 | 1.51 | 0.84 |
Price/Cash Flow | 7.63 | 7.27 | 34.37 |
|
Metric
|
SSE
|
IBE
|
RWE
|
|---|---|---|---|
Quick Ratio | 0.74 | 0.49 | 0.67 |
Current Ratio | 0.91 | 0.82 | 1.58 |
Interest Coverage | 2.78 | 4.14 | 2.96 |
|
Metric
|
SSE
|
IBE
|
RWE
|
|---|---|---|---|
Return on Assets (Normalized) | 6.38% | 3.96% | 3.84% |
Return on Equity (Normalized) | 21.19% | 12.48% | 14.38% |
Return on Invested Capital (Normalized) | 9.72% | 6.41% | 7.64% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
IBDSF
| Iberdrola SA | — | Mntrx | $77.4 Bil | |
IBDRY
| Iberdrola SA ADR | SB | Zfrhl | $76.8 Bil | |
ESOCF
| Enel SpA | Gdzrwdlhj | Pchld | $66.2 Bil | |
ENLAY
| Enel SpA ADR | Bpvkgpq | Kfhz | $66.2 Bil | |
SRE
| Sempra | Chvlxcrq | Mylxsgb | $45.2 Bil | |
ENGIY
| Engie SA ADR | — | Xhdn | $41.3 Bil | |
ENGQF
| Engie SA | — | Zhb | $40.9 Bil | |
ENAKF
| E.ON SE | — | Pgtw | $34.8 Bil | |
EONGY
| E.ON SE ADR | Tnmgydzb | Htm | $34.7 Bil | |
AES
| The AES Corp | Ypvmjdk | Hjvns | $11.9 Bil |
