MVV Energie (XTRA:MVV1) Valuation After Profit Drop, Higher Dividend and Faster Green Investment

MVV Energie (XTRA:MVV1) just reported a 15% drop in annual profit as past windfall gains faded, yet it chose to lift its dividend and step up spending on renewables and green heat.

See our latest analysis for MVV Energie.

Despite the softer earnings, the share price has been steady, with the latest close at €31.60 and a 3 month share price return of 3.61 percent. A 5 year total shareholder return of 48.88 percent suggests patient investors have still been rewarded as the market gradually prices in MVV Energie's green transition.

If this kind of transition story appeals to you, it could be worth scanning other regulated utilities and infrastructure names, as well as fast growing stocks with high insider ownership, for fresh ideas beyond the usual suspects.

With earnings normalizing, the dividend rising, and heavy spending on green infrastructure, the market seems cautiously optimistic. But at around €31.60, is MVV Energie quietly undervalued or already fully pricing in its future growth?

Price-to-Earnings of 16.7x: Is it justified?

MVV Energie trades on a price-to-earnings ratio of 16.7 times at a last close of €31.60, suggesting a valuation roughly in line with broader peers but not a clear bargain.

The price-to-earnings multiple compares the current share price to the company’s earnings per share, which is a common yardstick for regulated utilities where profits are relatively stable. For MVV Energie, this measure sits slightly below the wider German market multiple of 17.8 times, hinting that investors are not paying a huge premium for its earnings despite the ongoing green investment push.

That said, the same 16.7 times earnings is marginally more expensive than the immediate peer average of 16.5 times, and it comes after a year in which headline earnings fell 31.9 percent and net profit margins slipped from 2.9 percent to 2 percent. Compared with the global integrated utilities average of 17.9 times, the market is applying a small discount, which could be interpreted as a modest nod to MVV Energie’s long term 12.1 percent annual earnings growth over five years, rather than its weaker recent trends.

On balance, the multiple looks neither aggressively cheap nor stretched. Instead, it reflects a market view that near term pressure on margins and high debt offset the longer track record of profit growth and the strategic tilt to renewables.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 16.7x (ABOUT RIGHT)

However, elevated leverage and any setback in executing capital intensive green projects could compress margins further and challenge the current valuation stance.

Find out about the key risks to this MVV Energie narrative.

Another View: DCF Points to Overvaluation

While the 16.7 times earnings multiple looks roughly fair, our DCF model is less forgiving. It pegs fair value at about €18.69 per share, implying MVV Energie trades at a hefty premium. Is the market overpaying for its green transition story, or is the model too cautious?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out MVV Energie for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 905 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own MVV Energie Narrative

If you are unconvinced by this view, or simply prefer to dig into the numbers yourself, you can construct a tailored narrative in minutes: Do it your way.

A great starting point for your MVV Energie research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

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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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