Engie: Earnings Reversal Could Bring About Excellent Returns

2025-02-05 05:13:42 ET

Summary

• Engie is a complex integrated utility with significant regulated exposure, including the French gas network, and is transitioning towards regulated electricity and renewables.
• The company is expected to see earnings declines in 2024-2025, but stabilization is forecasted for 2026-2027, with a dividend yield around 5-9%.
• Engie trades at a discounted valuation with a BBB+ rating and a P/E of 7.3x, presenting a market-beating return potential.
• Despite potential lower dividends and French governmental stake risks, I maintain a "Buy" rating with a €16.2/share target, seeing minimal downside.

Dear readers/followers,

Engie ( OTCPK:ENGIY ) is perhaps one of the more complex integrated utilities that I cover on Seeking Alpha due to its generation mix. Comparable companies to this one include two of the more prominent ones on my coverage list, Enel ( OTCPK:ENLAY ) and Iberdrola ( OTCPK:IBDRY ). I own stakes in both of these, as well as a stake in Engie. However, my stake in Engie is significantly smaller, and I'm more conservative on this business. Since my last article, which you can find here , the company has underperformed the S&P 500 by about 7%....

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