DB:ER9

Stock Analysis Report

NOT FOR DISTRIBUTION
Header cover image

Executive Summary

ERG S.p.A., through its subsidiaries, produces energy through renewable sources in Italy, France, Germany, Poland, Bulgaria, Romania, and the United Kingdom.


Snowflake Analysis

Average dividend payer and fair value.

Share Price & News

How has ERG's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ER9 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.4%

ER9

-0.2%

DE Renewable Energy

5.0%

DE Market


1 Year Return

11.0%

ER9

17.7%

DE Renewable Energy

4.1%

DE Market

Return vs Industry: ER9 underperformed the German Renewable Energy industry which returned 17.7% over the past year.

Return vs Market: ER9 exceeded the German Market which returned 4.1% over the past year.


Shareholder returns

ER9IndustryMarket
7 Day3.4%-0.2%5.0%
30 Day15.6%15.4%13.8%
90 Day-9.6%7.0%3.3%
1 Year16.1%11.0%22.9%17.7%5.8%4.1%
3 Year83.0%56.9%83.2%60.0%-0.9%-8.5%
5 Year129.0%71.5%86.6%64.3%10.5%-3.6%

Price Volatility Vs. Market

How volatile is ERG's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is ERG undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ER9 (€18.99) is trading below our estimate of fair value (€49.38)

Significantly Below Fair Value: ER9 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ER9 is poor value based on its PE Ratio (94.2x) compared to the Renewable Energy industry average (27.3x).

PE vs Market: ER9 is poor value based on its PE Ratio (94.2x) compared to the German market (20.1x).


Price to Earnings Growth Ratio

PEG Ratio: ER9 is poor value based on its PEG Ratio (4.4x)


Price to Book Ratio

PB vs Industry: ER9 is good value based on its PB Ratio (1.6x) compared to the DE Renewable Energy industry average (1.8x).


Next Steps

Future Growth

How is ERG forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

21.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ER9's forecast earnings growth (21.2% per year) is above the savings rate (0.2%).

Earnings vs Market: ER9's earnings (21.2% per year) are forecast to grow slower than the German market (22.7% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: ER9's revenue (3.1% per year) is forecast to grow slower than the German market (5.7% per year).

High Growth Revenue: ER9's revenue (3.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ER9's Return on Equity is forecast to be low in 3 years time (6.9%).


Next Steps

  • Explore growth companies in the Utilities industry.

Past Performance

How has ERG performed over the past 5 years?

19.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ER9 has a large one-off loss of €24.5M impacting its March 31 2020 financial results.

Growing Profit Margin: ER9's current net profit margins (3%) are lower than last year (9.8%).


Past Earnings Growth Analysis

Earnings Trend: ER9 has become profitable over the past 5 years, growing earnings by 19.5% per year.

Accelerating Growth: ER9's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ER9 had negative earnings growth (-69.6%) over the past year, making it difficult to compare to the Renewable Energy industry average (21.9%).


Return on Equity

High ROE: ER9's Return on Equity (1.7%) is considered low.


Next Steps

Financial Health

How is ERG's financial position?


Financial Position Analysis

Short Term Liabilities: ER9's short term assets (€992.1M) exceed its short term liabilities (€342.5M).

Long Term Liabilities: ER9's short term assets (€992.1M) do not cover its long term liabilities (€2.4B).


Debt to Equity History and Analysis

Debt Level: ER9's debt to equity ratio (114.5%) is considered high.

Reducing Debt: ER9's debt to equity ratio has increased from 87.8% to 114.5% over the past 5 years.

Debt Coverage: ER9's debt is well covered by operating cash flow (21.5%).

Interest Coverage: ER9's interest payments on its debt are well covered by EBIT (5.6x coverage).


Balance Sheet


Next Steps

Dividend

What is ERG's current dividend yield, its reliability and sustainability?

3.83%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: ER9's dividend (3.83%) is higher than the bottom 25% of dividend payers in the German market (1.26%).

High Dividend: ER9's dividend (3.83%) is in the top 25% of dividend payers in the German market (3.8%)


Stability and Growth of Payments

Stable Dividend: ER9's dividends per share have been stable in the past 10 years.

Growing Dividend: ER9's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (360.7%), ER9's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ER9's dividends in 3 years are not forecast to be well covered by earnings (91.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

6.4yrs

Average management tenure


CEO

Luca Bettonte (56yo)

8.17yrs

Tenure

€5,819,087

Compensation

Mr. Luca Bettonte serves as the Chief Executive Officer of ERG SpA since April 2012 and has been its Executive Director since December 15, 2009. Mr. Bettonte serves as an Executive Director at ERG Renew Sp ...


CEO Compensation Analysis

Compensation vs Market: Luca's total compensation ($USD0.00) is below average for companies of similar size in the German market ($USD2.40M).

Compensation vs Earnings: Luca's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Edoardo Garrone
Founder & Executive Chairman5.17yrs€1.06mno data
Luca Bettonte
CEO & Executive Director8.17yrs€5.82mno data
Alessandro Garrone
Executive Deputy Chairman5.17yrs€2.65mno data
Paolo Merli
Chief Financial Officer6.25yrsno datano data
Pietro Tittoni
Chief Operating Officerno datano datano data
Andrea Navarra
General Counselno datano datano data
Lucia Bormida
Chief Public Affairs & Communication Officerno datano datano data
Alberto Fusi
Chief Human Capital & ICT Officerno datano datano data
Giorgio Coraggioso
Managing Director of ERG Services6.42yrsno datano data
Giovanni Scollo
Head of Corporate Affairs & Secretaryno datano datano data

6.4yrs

Average Tenure

56yo

Average Age

Experienced Management: ER9's management team is seasoned and experienced (6.4 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Edoardo Garrone
Founder & Executive Chairman5.17yrs€1.06mno data
Luca Bettonte
CEO & Executive Director8.17yrs€5.82mno data
Alessandro Garrone
Executive Deputy Chairman5.17yrs€2.65mno data
Riccardo Garrone
Honorary Chairmanno data€50.00kno data
Giovanni Mondini
Deputy Chairman of the Board5.17yrs€363.85kno data
Massimo Belcredi
Lead Independent Director4.08yrs€115.00kno data
Paolo Lanzoni
Non Executive Director17.17yrs€150.83kno data
Silvia Merlo
Independent Director5.17yrs€60.00kno data
Mara Anna Caverni
Independent Director5.17yrs€90.00kno data
Elena Spagnol
Chairman of Board of Statutory Auditors4.08yrsno datano data

5.2yrs

Average Tenure

56yo

Average Age

Experienced Board: ER9's board of directors are considered experienced (5.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

ERG S.p.A.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: ERG S.p.A.
  • Ticker: ER9
  • Exchange: DB
  • Founded: 1938
  • Industry: Independent Power Producers and Energy Traders
  • Sector: Utilities
  • Market Cap: €2.915b
  • Shares outstanding: 148.87m
  • Website: https://www.erg.eu

Number of Employees


Location

  • ERG S.p.A.
  • Torre WTC
  • Via De Marini, 1
  • Genoa
  • Genoa
  • 16149
  • Italy

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ERGBIT (Borsa Italiana)YesOrdinary SharesITEUROct 1997
ER9DB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 1997
0MHCLSE (London Stock Exchange)YesOrdinary SharesGBEUROct 1997
ERGZ.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDOct 1997
ERGMBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBEUROct 1997

Biography

ERG S.p.A., through its subsidiaries, produces energy through renewable sources in Italy, France, Germany, Poland, Bulgaria, Romania, and the United Kingdom. The company generates electricity through wind, solar, hydroelectric, and thermoelectric power plants, as well as natural gas cogeneration plants. As of December 31, 2019, it had wind farms installed capacity of 1,929 MW; solar plants installed capacity of 141 MW; hydroelectric plants installed capacity of 527 MW; and thermoelectric plants installed capacity of 480 MW. The company was founded in 1938 and is headquartered in Genoa, Italy. ERG S.p.A. is a subsidiary of San Quirico S.p.A. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/06/04 21:36
End of Day Share Price2020/06/04 00:00
Earnings2020/03/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.