ELEZF - Endesa: Power Price Headwinds

2024-03-25 22:32:06 ET

Summary

• Endesa's 2023 EBITDA like for like declined 18% year over year to €4.392 billion, with lower natural gas prices versus 2022's abnormally high natural prices as one reason.
• In terms of outlook, management sees annual dividend per share rising from €1 in 2023 to ~€1.1 in 2024 and ~€1.5 in 2026.
• For 2026 forward, Endesa faces headwinds given likely lower power prices, which might make the company achieving its ~€1.5 annual dividend per share goal in 2026 pretty difficult.
• I rate Endesa a 'Hold' as in 'underweight'. If I were to own it, I would own it in a diversified portfolio.

Endesa, S.A. ( OTCPK:ELEZF ) is the largest electricity provider in Spain that is majority owned by the Italian multinational, Enel. Currently, Enel owns around 70.1% of Endesa, which it bought in 2009 .

Endesa's main business is the generation, distribution, and sale of electricity although the company is also an important operator in the natural gas sector and provides other services related to energy....

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