What Do Recent Developments Mean for Ørsted’s Share Price Drop in 2025?

If you’re wondering what to do with Ørsted stock right now, you’re not alone. Investors everywhere are sizing up their options after a rough ride this year. While shares rebounded 4.8% over the past week, the broader trend still looks challenging, with the price down a staggering 41.0% in the last month. Year-to-date, the stock has been battered, down 64.1%. If you zoom out even further, the five-year loss stands at a stunning 77.2%.

Behind these moves is shifting sentiment about both the renewable energy sector and Ørsted’s ability to navigate changing market conditions. Some of the recent price swings reflect concerns over project delays, changing government policies, and questions about long-term profitability. At the same time, the company continues to hold a leading position in offshore wind and remains a focal point for investors who believe in the green transition.

Here's the interesting bit: despite the dramatic price drop, Ørsted now scores a 4 when screening for undervaluation across six major financial checks. That means it appears undervalued in four important ways. This opens up a new angle for anyone considering whether now is the right moment to buy, sell, or simply watch from the sidelines.

In the next section, I’ll break down exactly what goes into Ørsted’s valuation score, exploring how each method stacks up, and hint at a more powerful approach to understanding value that you won’t want to miss later on.

Why Ørsted is lagging behind its peers

Approach 1: Ørsted Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is an investment valuation approach that forecasts a company’s future cash flows and then discounts them back to today’s value. This process provides a sense of what the business is truly worth. For Ørsted, this analysis uses a 2 Stage Free Cash Flow to Equity model based in DKK, projecting future free cash flows and accounting for risk and the time value of money.

Currently, Ørsted’s last twelve months of free cash flow is at a negative DKK 22.16 billion, indicating that the company is burning through cash in the near term. Analyst estimates project continued volatility, with free cash flow expected to remain negative through 2027, but shift to positive in the following years. By 2029, free cash flow is forecast to reach DKK 30.26 billion. Looking further ahead, extrapolations suggest the company could generate around DKK 9.37 billion in free cash flow by 2035.

Summing and discounting all of these projected numbers, the model calculates an intrinsic value for Ørsted shares of DKK 268.72. Compared with the current market price, this represents a 55.1% discount, suggesting the shares are potentially significantly undervalued based on these assumptions.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Ørsted.

Our Discounted Cash Flow (DCF) analysis suggests Ørsted is undervalued by 55.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Ørsted Price vs Earnings (PE Ratio Analysis)

The Price-to-Earnings (PE) ratio is a classic tool for valuing profitable companies because it gives investors a quick sense of how much they are paying for each unit of annual earnings. When a business is generating positive profits, the PE ratio becomes especially meaningful as it reflects the market's expectations regarding the company's ongoing growth, stability, and risk profile.

A company with strong growth prospects, lower risks, or high profitability often justifies a higher PE ratio, while slower growth or greater risks generally warrant a lower one. For Ørsted, the current PE ratio stands at 8.53x, meaning the market prices its earnings lower than many competitors. By comparison, the broader renewable energy industry averages a PE of 16.18x, and Ørsted's peer group shows an even higher typical value at 49.36x.

Simply Wall St's Fair Ratio takes this analysis further by tailoring a reasonable PE multiple for Ørsted based on its unique growth outlook, risks, profitability, industry characteristics, and market cap. This approach is more insightful than simply comparing to industry peers because it goes beyond surface averages and considers factors that truly drive value. When you compare Ørsted's actual PE ratio to its Fair Ratio, the two are closely aligned, indicating that the stock is priced fairly relative to its fundamentals.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Ørsted Narrative

Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple yet powerful concept: it is your investment story, where you set the context behind the numbers by choosing your assumptions for Ørsted’s future revenue, earnings, and margins. Narratives link what you believe about a company to projected financial outcomes and, ultimately, a personalized fair value.

Accessible right within Simply Wall St’s Community page, Narratives make it easy for anyone, at any experience level, to build their own view, compare it to the market price, and decide when to buy or sell. As soon as important events or news updates happen, Narratives respond dynamically so your perspective can stay current with the facts.

With Ørsted, for example, one investor may see huge future profitability driving a fair value nearly double today’s price, while another could expect challenging years ahead, placing fair value well below the current level. Narratives let you see and learn from these diverse viewpoints, making your decisions smarter and more dynamic than relying on static metrics alone.

Do you think there's more to the story for Ørsted? Create your own Narrative to let the Community know!

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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