Last Update 27 Apr 26
Fair value Decreased 1.39%VLTSA: Growing Long Term Solar Contracts Will Support Future Returns
Analysts have slightly reduced their price target on Voltalia from about €10.31 to roughly €10.17, citing updated views on discount rates, revenue growth, profit margins and future P/E assumptions.
What's in the News
- Voltalia reported first quarter 2026 production of 1,105 GWh, compared with 1,121 GWh for the same quarter a year earlier, with production curtailment at 113 GWh versus 87 GWh. (company announcement)
- For the fourth quarter of 2025, Voltalia reported production of 1,261 GWh compared with 1,415 GWh a year earlier, and production curtailment of 389 GWh versus 168 GWh. (company announcement)
- For full year 2025, Voltalia reported production of 4,910 GWh compared with 4,706 GWh a year earlier, and production curtailment of 1,040 GWh versus 876 GWh. (company announcement)
- The Bolobedu solar farm in South Africa, with installed capacity of 148 megawatts, has reached full commissioning and is planned to supply around 300 GWh per year under a long term contract with Richards Bay Minerals via the Eskom Transmission Network. (company announcement)
- Voltalia and subsidiary Renvolt signed a turnkey EPC contract for the 124.2 megawatt ESB Wexford Hub solar project in Ireland, with Renvolt’s under construction capacity for third parties now above 1 gigawatt. (company announcement)
Valuation Changes
- Fair Value: reduced slightly from €10.31 to €10.17.
- Discount Rate: risen slightly from 8.24% to about 8.31%.
- Revenue Growth: assumption lifted marginally from about 8.36% to roughly 8.51%.
- Net Profit Margin: assumption increased from about 5.25% to around 6.81%.
- Future P/E: brought down significantly from about 43.6x to roughly 33.1x.
Key Takeaways
- The SPRING project and long-term PPAs aim to simplify operations and stabilize revenues, enhancing overall performance and margins.
- Strategic diversification in power generation and geographic focus on Europe could boost revenues and increase long-term earnings and EBITDA.
- Regulatory uncertainties, high leverage, and market shifts may hinder Voltalia's revenue growth, profitability, and financial stability in a competitive renewable energy landscape.
Catalysts
About Voltalia- Engages in the production and sale of energy generated by the wind, solar, hydropower, biomass, and storage plants.
- The launch of the SPRING transformation project aims to simplify Voltalia's business model, prioritize returns against growth, and consolidate geographical presence, which could enhance overall performance and lead to improved margins and earnings.
- Securing long-term, inflation-indexed PPAs with an extended lifespan of over 16 years ensures stability and predictability of revenues from energy sales, which is expected to positively affect revenue and net margins.
- The dual focus on centralized and decentralized green power generation diversifies market opportunities, potentially boosting revenues and balancing risk exposure to grid congestion, leading to higher net margins.
- The development of innovative projects, such as the storage project in Uzbekistan with a 15-year PPA, offers new revenue streams with no merchant risk, expected to enhance earnings and margins.
- Strategic geographical diversification and growth in the pipeline, with increased focus on Europe, alongside continued development and sale of high-margin projects, potentially increase long-term revenue and EBITDA.
Voltalia Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?
- Analysts are assuming Voltalia's revenue will grow by 8.5% annually over the next 3 years.
- Analysts assume that profit margins will increase from -17.1% today to 6.8% in 3 years time.
- Analysts expect earnings to reach €51.1 million (and earnings per share of €0.39) by about April 2029, up from -€100.5 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as €78.4 million.
- In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 33.1x on those 2029 earnings, up from -9.5x today. This future PE is greater than the current PE for the GB Renewable Energy industry at 9.1x.
- Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.31%, as per the Simply Wall St company report.
Risks
What could happen that would invalidate this narrative?- The competitive environment for signing new PPAs, along with the potential slower growth pace in the renewable energy market, could impact Voltalia’s revenue growth and profitability.
- The significant net loss of €21 million reported for 2024, driven by equipment supply business decline and curtailment impacts, indicates risks to net margins and overall earnings.
- Continued curtailment issues in Brazil and regulatory uncertainties could negatively affect project returns and increase the risk of impairments, thereby impacting earnings.
- High leverage with a net debt to EBITDA ratio of 9%, combined with an increased cost of debt to 6.1%, could affect cash flow and financial stability, impacting net margins.
- Merchant price exposure aversion and potential market shifts in the structure of PPAs might limit flexibility and revenue predictability, posing risks to sustained earnings growth.
Valuation
How have all the factors above been brought together to estimate a fair value?
- The analysts have a consensus price target of €10.17 for Voltalia based on their expectations of its future earnings growth, profit margins and other risk factors.
- However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €21.8, and the most bearish reporting a price target of just €7.0.
- In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be €751.0 million, earnings will come to €51.1 million, and it would be trading on a PE ratio of 33.1x, assuming you use a discount rate of 8.3%.
- Given the current share price of €7.27, the analyst price target of €10.17 is 28.5% higher.
- 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.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
