ENGQF - Engie: Higher Guidance And DPS Floor, Buy Confirmed

2025-05-18 03:38:28 ET

Summary

• The company reiterated its 2025 guidance, while there was a broad-based earnings beat.
• Engie increased its annual dividend floor from €0.65 to €1.10 per share, demonstrating financial stability and earnings resiliency.
• The company will no longer be exposed to nuclear waste management costs. With a valuation discount, we remain buyers.

We have long focused on the EU utilities space, with our disciplined screening process focusing on resilient cash flow generation, regulatory improvement, and attractive valuations, Engie (ENGIY) (ENGQF) stood out as a particularly compelling opportunity. While the stock had lagged peers due to past operational setbacks, we see encouraging progress on multiple fronts. Since our initiation of coverage, Engie's shares are up by more than 44% (Fig. 1), including two tasty dividend payments. Aside from a compelling valuation while growing, our downside protection was backed by 1) group strategy simplification with cost savings, 2) higher energy consumption and CAPEX investment in the network division, and 3) EU Commission approval of the company's nuclear deal with the Belgian government....

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