Redes Energeticas Nacionais SA : Neutral assessment

Redes Energeticas Nacionais SA relative valuation is now NEUTRAL. It was previously rated OVERVALUED, and has a fundamental analysis score of 36.

Our analysis is based on comparing Redes Energeticas Nacionais SA with the following peers – A2A S.p.A., EDP – Energias de Portugal SA and Electricite de Strasbourg SA (A2A-IT, EDP-PT and ELEC-FR).

Relative Valuation

Redes Energeticas Nacionais SA is currently neutrally valued, as its previous close of EUR 2.76 lies within the CapitalCube estimate range of EUR 2.52 to EUR 2.77. Over the last 52 week period, Redes Energeticas Nacionais SA has fluctuated between EUR 2.23 and EUR 2.88.

Relative Valuation

Company Overview

  • Relative underperformance over the last year and the last month suggest a lagging position.
  • Redes Energeticas Nacionais SA’s current Price/Book of 0.78 is about median in its peer group.
  • The market expects RENE-PT to grow more slowly than its peers and for its median ROE to decline.
  • RENE-PT‘s relatively high profit margins are burdened by relative asset inefficiency.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • RENE-PT‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • RENE-PT‘s revenues have grown more slowly than the peer median over the last few years, which combined with the stock price’s relatively low PE ratio suggests substandard growth expectations relative to peers.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • RENE-PT seems to be constrained by the current level of debt.

Investment Outlook

Redes Energeticas Nacionais SA has a fundamental score of 36 and has a relative valuation of NEUTRAL.

Redes Energeticas Nacionais SA is on the bottom right quadrant of CapitalCube’s Value – Price Matrix. We therefore classify Redes Energeticas Nacionais SA as ‘Speculative’. In other words, not only is Redes Energeticas Nacionais SA’s Fundamental Analysis Score low at 36, but it is also potentially overvalued, in that it trades at a price higher than its CapitalCube Implied Price of 2.64.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

The market expects RENE-PT‘s current median rates of return to decline.

The market expects less growth from RENE-PT than the median of its chosen peers (PE of 6.73 compared to peer median of 11.73) and for its current rates of return that are around peer median (ROE of 11.88%) to decline.

The company’s current Price/Book of 0.78 is about median in its peer group.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

RENE-PT has moved to a relatively low PE from a median ROE and PE profile at the prior year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Redes Energeticas Nacionais SA is a holding company, which operates and distributes electricity and natural gas. It operates through the following segments: Electricity, Gas, Telecommunications, and Others. The Electricity segment deals with the transmission of electricity and overall management of the public electricity supply system. The Gas segment includes the transportation of gas; management of national natural gas system; and operation of the liquefied natural gas regasification terminal and underground storage of natural gas. The telecommunications segment operates telecommunications network. The Others segment includes the operations of REN SGPS, REN Servi�os and REN Finance, BV. The company was founded on August 18, 1994 and is headquartered in Lisbon, Portugal.

Disclaimer

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