Snam SpA SRG

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€4.27 −0.07 (1.52%)

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As of Apr 25, 2024 3:35pm Delayed Price Closed

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Company Report

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No-Moat Snam to See Higher Allowed Returns in 2024; Initiating With EUR 4.70 Fair Value Estimate

Tancrede Fulop Nov 21, 2023

Snam has three regulated segments: transportation, storage, and regasification/liquefied natural gas. The transportation segment, largely natural gas pipelines, contributes 80% of group EBIT. Storage contributes 20%, and regasification is only a marginal contributor. While these regulated assets benefit from efficient scale, we assign a no-moat rating to Snam as regulation limits pretax allowed returns to keep prices low for customers.

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Price vs Fair Value

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SRG is trading at a 7% discount.

Price

€4.38

Apr 23, 2024

Fair Value

€9.70

Nov 20, 2023

Uncertainty

Low

1-Star Price: €1.98
5-Star Price: €9.92
Economic Moat: Rlgb
Capital Allocation: Rlnrqncwv

Bulls Say, Bears Say

Bulls

Snam has high earnings and dividend visibility as its main businesses earn regulated returns.

Bears

Investments in the energy transition do not strengthen the company’s moat, especially in biomethane and carbon capture and storage.

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Trading Information

Previous Close Price: €4.34
Day Range: €4.23–4.35
52-Week Range: €4.18–5.18
Bid/Ask: €4.23 / €4.28
Market Cap: €14.33 Bil
Volume/Avg: 6.5 Mil / 7.5 Mil

Key Statistics

Price/Earnings (Normalized): 12.70
Price/Sales: 3.42
Dividend Yield (Trailing): 6.40%
Dividend Yield (Forward): 6.40%
Total Yield: 6.35%

Company Profile

Snam operates a network of about 38,000 kilometers of natural gas pipelines in Italy and abroad. It also holds 17.1% of European gas storage capacity and 6.5 billion cubic meters of LNG regasification capacity. Snam is investing in hydrogen, biofuels, carbon capture and storage, and energy efficiencies to prepare for the energy transition. Snam became independent from Eni in 2012 after the latter sold its stake to Cassa Depositi e Prestiti, a financial institution controlled by the Ministry of Economy and Finance.

Sector: Utilities
Industry: Utilities - Regulated Gas
Stock Style Box: Large Value
Total Number of Employees: 3,798
Website: https://www.snam.it

Competitors

Valuation

Metric	SRG	PPL	ED
Price/Earnings (Normalized)	12.70	18.49	19.18
Price/Book Value	1.92	1.45	1.53
Price/Sales	3.42	2.43	2.23
Price/Cash Flow	6.24	10.65	8.56

Price/Earnings

SRG

PPL

Financial Strength

Metric	SRG	PPL	ED
Quick Ratio	—	0.59	0.77
Current Ratio	0.13	0.88	1.01
Interest Coverage	7.13	2.34	3.94

Quick Ratio

SRG

PPL

Profitability

Metric	SRG	PPL	ED
Return on Assets (Normalized)	3.27%	3.08%	2.34%
Return on Equity (Normalized)	10.19%	8.47%	7.31%
Return on Invested Capital (Normalized)	4.30%	5.87%	5.33%

Return on Assets

SRG

PPL

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SNMRF	Snam SpA	—	Nmprvb	$15.6 Bil
SNMRY	Snam SpA ADR	—	Mytfqn	$15.6 Bil
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