Origin Energy (ASX:ORG) Is Up 6.0% After Signaling Possible Eraring Coal Plant Extension – Has the Bull Case Changed?

• Origin Energy recently reported full-year earnings for the period ended June 30, 2025, with sales rising to A$17.22 billion and net income increasing to A$1.48 billion compared to the previous year, alongside commentary on the ongoing challenges of the energy transition.
• An interesting insight is the company’s indication that its Eraring coal-fired plant may remain operational beyond 2027 amid a slower and costlier than expected shift toward renewables, signaling a pragmatic approach to balancing supply stability and net zero ambitions.
• We'll now explore how Origin Energy's acknowledgment of higher transition costs and a potential extension of coal operations impacts its investment narrative.

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Origin Energy Investment Narrative Recap

To be a shareholder in Origin Energy, you need to believe in the company's ability to balance reliable energy supply with its transition toward renewables, even as this shift proves slower and more expensive than predicted. The recent news on Eraring’s potential coal extension does not materially change the core near-term catalyst: managing energy transition costs while maintaining earnings stability. The biggest short-term risk remains pressure on net margins from elevated capital expenditures and operational uncertainty as Origin invests in new infrastructure.

Of the recent announcements, the full-year earnings result stands out as most relevant: revenue and net income both increased year over year, suggesting resilience amid transition headwinds. However, the company’s acknowledgment of higher infrastructure costs to support renewables highlights that cost containment will be critical for supporting both dividends and returns in the near term.

In contrast, any sharp increase in required capital expenditure should catch the eye of investors who may not realize just how closely Origin’s margins are tied to...

Read the full narrative on Origin Energy (it's free!)

Origin Energy’s outlook anticipates revenues of A$16.8 billion and earnings of A$1.2 billion by 2028. This scenario is based on a 0.3% annual revenue decline and a decrease of A$200 million in earnings from the current A$1.4 billion.

Uncover how Origin Energy's forecasts yield a A$11.12 fair value, a 12% downside to its current price.

Exploring Other Perspectives

Simply Wall St Community members provided fair value estimates for Origin Energy ranging from A$10.51 to A$11.12, based on two independent analyses. With transition costs rising and returns under pressure, community sentiment reflects a wide range of expectations, consider the diversity of outlooks when weighing the company’s future.

Explore 2 other fair value estimates on Origin Energy - why the stock might be worth 17% less than the current price!

Build Your Own Origin Energy Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Origin Energy research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.
• Our free Origin Energy research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Origin Energy's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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