Escalating Geopolitical Tensions Will Cripple Overvalued Renewable Prospects

Key Takeaways

• Geopolitical tensions, regulatory uncertainty, and trade barriers heighten project delays, cost risks, and margin pressure, threatening both international expansion and long-term earnings stability.
  
• Higher financing costs, asset rotation challenges, and intensifying technological disruption may limit new project development, compress profitability, and increase earnings volatility.
  
• Strong earnings momentum, successful asset sales, and global clean energy trends position the company for stable growth, financial resilience, and long-term value creation.

Catalysts

Corporación Acciona Energías Renovables, S.A.

• Intensifying geopolitical tensions and protectionist trade policies have already forced the company to halt major US storage projects and inject significant uncertainty into the procurement of key equipment; escalating global trade fragmentation and more complex local-content requirements could increase project costs, delay international expansion, and squeeze net margins over the longer term.
  
• Global interest rates remain structurally higher than in the past decade, significantly raising the cost of capital for Acciona Energías Renovables' highly leveraged growth model; persistent financing headwinds will make it more expensive to develop new projects, limit future EBITDA growth, and materially slow the pace of capacity additions.
  
• Policy backtracking and unclear regulatory frameworks in key renewable markets, particularly the US and other regions, have already dampened the company's near-term investment appetite and may lead to a diminished project pipeline, threatening both revenue growth and long-term earnings visibility.
  
• Execution risk remains elevated given the company's continued reliance on a shrinking European core and ongoing asset rotation; any further delays, overruns, or underperformance in new geographies could result in shortfalls relative to guidance, impair capital allocation efficiency, and increase earnings volatility.
  
• Accelerating technological disruption from competing technologies or storage solutions, combined with the risk of market saturation and declining returns in mature regions, could compress power purchase agreement prices and lower utilization rates, directly eroding long-run profitability and return on invested capital.

Corporación Acciona Energías Renovables Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Corporación Acciona Energías Renovables compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Corporación Acciona Energías Renovables's revenue will decrease by 18.0% annually over the next 3 years.
• The bearish analysts assume that profit margins will shrink from 16.5% today to 9.0% in 3 years time.
• The bearish analysts expect earnings to reach €224.0 million (and earnings per share of €0.69) by about August 2028, down from €747.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 33.7x on those 2028 earnings, up from 10.3x today. This future PE is greater than the current PE for the ES Renewable Energy industry at 16.4x.
• Analysts expect the number of shares outstanding to grow by 0.08% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.88%, as per the Simply Wall St company report.

Corporación Acciona Energías Renovables Future Earnings Per Share Growth

Risks

• The company is experiencing robust operational and financial performance, with revenue growing by 5% to €9.2 billion and EBITDA increasing by 57% to €1.6 billion, indicating strong earnings momentum and sustained profitability that could support the share price over the long term.
  
• Asset rotation proceeds are materializing above expectations, with capital gains from disposals significantly exceeding the values implicit in the company's share price and demonstrating strong market appetite for renewable assets, which can continue to bolster net profit and balance sheet flexibility going forward.
  
• An extensive and geographically diversified infrastructure and concessions backlog, reaching a record €58 billion and supported by large-scale long-term projects across Australia, the U.S., Latin America, and Europe, provides visibility and stability to future revenue streams and supports multi-year cash flow growth.
  
• The company's strategy to moderate CapEx, focus on deleveraging, and maintain investment-grade ratings enhances financial resilience, while the pipeline of projects and stable cash generation position the business for renewed growth when market conditions allow, supporting sustained or rising net margins over time.
  
• Global secular trends, such as the accelerating shift to clean energy, electrification of multiple sectors, tripling of electricity demand, and record-breaking global infrastructure investment, directly benefit Acciona Energías Renovables' core competencies and are likely to drive expanding revenue, earnings, and valuation multiples in the coming years.

Valuation

• The assumed bearish price target for Corporación Acciona Energías Renovables is €17.5, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Corporación Acciona Energías Renovables's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €29.1, and the most bearish reporting a price target of just €17.5.
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be €2.5 billion, earnings will come to €224.0 million, and it would be trading on a PE ratio of 33.7x, assuming you use a discount rate of 9.9%.
• Given the current share price of €23.6, the bearish analyst price target of €17.5 is 34.9% lower.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.