BIT:ERG

Stock Analysis Report

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.

Rewards

Earnings are forecast to grow 6.05% per year

Pays a reliable dividend of 3.26%

Risk Analysis

Debt is not well covered by operating cash flow

Dividend of 3.26% is not well covered by earnings



Snowflake Analysis

Average dividend payer with imperfect balance sheet.

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: ERG has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.2%

ERG

1.7%

IT Renewable Energy

1.4%

IT Market


1 Year Return

35.2%

ERG

20.4%

IT Renewable Energy

16.5%

IT Market

Return vs Industry: ERG exceeded the Italian Renewable Energy industry which returned 20.4% over the past year.

Return vs Market: ERG exceeded the Italian Market which returned 16.5% over the past year.


Shareholder returns

ERGIndustryMarket
7 Day3.2%1.7%1.4%
30 Day11.6%4.3%2.9%
90 Day21.1%9.0%4.2%
1 Year41.4%35.2%22.2%20.4%21.6%16.5%
3 Year149.0%114.4%86.4%78.5%37.4%23.8%
5 Year172.3%105.0%73.0%60.4%19.7%-21.2%

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

Valuation

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

39.46x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: ERG (€22.98) is trading above our estimate of fair value (€11.69)

Significantly Below Fair Value: ERG is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: ERG is poor value based on its PE Ratio (39.5x) compared to the Renewable Energy industry average (38.9x).

PE vs Market: ERG is poor value based on its PE Ratio (39.5x) compared to the Italian market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: ERG is poor value based on its PEG Ratio (6.5x)


Price to Book Ratio

PB vs Industry: ERG is overvalued based on its PB Ratio (2x) compared to the IT 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 6 analysts?

6.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ERG's forecast earnings growth (6% per year) is above the savings rate (1.2%).

Earnings vs Market: ERG's earnings (6% per year) are forecast to grow slower than the Italian market (9.7% per year).

High Growth Earnings: ERG's earnings are forecast to grow, but not significantly.

Revenue vs Market: ERG's revenue (0.5% per year) is forecast to grow slower than the Italian market (4.6% per year).

High Growth Revenue: ERG's revenue (0.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ERG's Return on Equity is forecast to be low in 3 years time (7.2%).


Next Steps

Past Performance

How has ERG performed over the past 5 years?

41.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ERG has high quality earnings.

Growing Profit Margin: ERG's current net profit margins (8.5%) are lower than last year (10.5%).


Past Earnings Growth Analysis

Earnings Trend: ERG has become profitable over the past 5 years, growing earnings by 41.9% per year.

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

Earnings vs Industry: ERG had negative earnings growth (-21.9%) over the past year, making it difficult to compare to the Renewable Energy industry average (11.5%).


Return on Equity

High ROE: ERG's Return on Equity (5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is ERG's financial position?


Financial Position Analysis

Short Term Liabilities: ERG's short term assets (€909.8M) exceed its short term liabilities (€402.9M).

Long Term Liabilities: ERG's short term assets (€909.8M) do not cover its long term liabilities (€2.6B).


Debt to Equity History and Analysis

Debt Level: ERG's debt to equity ratio (127.7%) is considered high.

Reducing Debt: ERG's debt to equity ratio has increased from 89.1% to 127.7% over the past 5 years.

Debt Coverage: ERG's debt is not well covered by operating cash flow (19.8%).

Interest Coverage: ERG's interest payments on its debt are well covered by EBIT (7.9x coverage).


Balance Sheet

Inventory Level: ERG has a high level of physical assets or inventory.

Debt Coverage by Assets: ERG's debt is not covered by short term assets (assets are 0.4x debt).


Next Steps

Dividend

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

3.26%

Current Dividend Yield


Dividend Yield vs Market

company3.3%marketbottom25%1.9%markettop25%4.3%industryaverage2.5%forecastin3Years3.3%

Current dividend yield vs market & industry

Notable Dividend: ERG's dividend (3.26%) is higher than the bottom 25% of dividend payers in the Italian market (1.88%).

High Dividend: ERG's dividend (3.26%) is low compared to the top 25% of dividend payers in the Italian market (4.27%).


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (128.8%), ERG's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ERG's dividends in 3 years are forecast to be covered by earnings (87.4% payout ratio).


Next Steps

Management

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

6.1yrs

Average management tenure


CEO

Luca Bettonte (56yo)

7.8yrs

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 ($USD0.00) is below average for companies of similar size in the Italian market ($USD2.21M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Edoardo Garrone
Founder & Executive Chairman4.8yrs€1.06mno data
Luca Bettonte
CEO & Executive Director7.8yrs€5.82mno data
Alessandro Garrone
Executive Deputy Chairman4.8yrs€2.65mno data
Paolo Merli
Chief Financial Officer5.9yrsno datano data
Pietro Tittoni
Chief Operating Officer0yrsno datano data
Andrea Navarra
General Counsel0yrsno datano data
Lucia Bormida
Chief Public Affairs & Communication Officer0yrsno datano data
Alberto Fusi
Chief Human Capital & ICT Officer0yrsno datano data
Giorgio Coraggioso
Managing Director of ERG Services6.1yrsno datano data
Giovanni Scollo
Head of Corporate Affairs & Secretary0yrsno datano data

6.1yrs

Average Tenure

56yo

Average Age

Experienced Management: ERG's management team is seasoned and experienced (6.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Edoardo Garrone
Founder & Executive Chairman4.8yrs€1.06mno data
Luca Bettonte
CEO & Executive Director7.8yrs€5.82mno data
Alessandro Garrone
Executive Deputy Chairman4.8yrs€2.65mno data
Riccardo Garrone
Honorary Chairman0yrs€50.00kno data
Giovanni Mondini
Deputy Chairman of the Board4.8yrs€363.85kno data
Massimo Belcredi
Lead Independent Director3.8yrs€115.00kno data
Paolo Lanzoni
Independent Director4.8yrs€150.83kno data
Silvia Merlo
Independent Director4.8yrs€60.00kno data
Mara Anna Caverni
Independent Director4.8yrs€90.00kno data
Elena Spagnol
Chairman of Board of Statutory Auditors3.8yrsno datano data

4.8yrs

Average Tenure

56yo

Average Age

Experienced Board: ERG's board of directors are considered experienced (4.8 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: ERG
  • Exchange: BIT
  • Founded: 1938
  • Industry: Independent Power Producers and Energy Traders
  • Sector: Utilities
  • Market Cap: €3.421b
  • 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
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, thermoelectric, and hydroelectric power plants, as well as natural gas cogeneration plants. As of December 31, 2017, it had wind farms installed capacity of 1,814 MW; thermoelectric plants installed capacity of 480 MW; and hydroelectric plants installed capacity of 527 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 Analysis2020/02/15 20:44
End of Day Share Price2020/02/14 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


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.