Is Iren’s 32% Rally in 2025 Justified Amid Slowing Cash Flow Growth?

Thinking about what to do with Iren stock right now? You are not alone. Many investors are weighing its impressive multi-year run against recent signs of stability, all in the context of a market rapidly adjusting to new realities. If you have been tracking Iren, you have probably noticed its eye-catching 32.4% gain so far this year, and its 125.8% climb over the past three years. Even looking at just the past twelve months, the stock is up 34.3%. While the last week and month have seen minor dips of -0.2% and -0.8%, respectively, these moves feel more like pauses than pivots in the bigger growth story.

So what is at play here? Much of Iren's upward trend can be linked to renewed investor interest in utilities, along with broader market shifts that have improved perceptions of risk for companies like Iren. But some of those tailwinds seem to be balancing out, making the current share price a real focal point for decision-making. That is where valuation comes in. Using a six-point framework, Iren scores a 3, meaning it appears undervalued in half of the key checks analysts use to size up a company's market worth.

This is where things get interesting. To really get a sense of what that valuation score means for you as an investor, let's dig into how each assessment method stacks up for Iren. And stick around, as later in the article we will touch on one approach that can offer an even clearer picture of the company's true value.

Iren delivered 34.3% returns over the last year. See how this stacks up to the rest of the Integrated Utilities industry.

Approach 1: Iren Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's true worth by projecting its future cash flows and discounting them back to today, reflecting what those future profits are worth in the present. This method is widely used for companies like Iren, as it goes beyond surface-level earnings to consider the long-term cash-generating power of the business.

Iren currently generates annual Free Cash Flow of €222 million. Analysts forecast modest growth in the years ahead, with Free Cash Flow projected to reach €124 million by 2027. From 2026 onwards, projections become more speculative, but Simply Wall St’s model extrapolates cash flow trends over the next decade, with estimates such as €105 million in 2026 and just under €97 million by 2030. These numbers consistently remain well below €1 billion, highlighting Iren's status as a sizable but not outsized player in its sector.

After processing the figures through a two-stage Free Cash Flow to Equity model, the DCF calculation lands at an intrinsic value of €1.07 per share. This is in stark contrast to the current trading price, suggesting Iren is trading around 143% above what its underlying cash flows can justify today. In other words, the market appears much more optimistic about Iren’s future than the actual cash projections support.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Iren may be overvalued by 142.8%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Iren Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a popular metric for valuing profitable companies like Iren because it connects a company’s share price directly to its underlying earnings. This gives investors an accessible way to gauge whether a stock is cheap or expensive relative to the profits it generates.

It is important to remember that the right or “fair” PE ratio depends on more than just current earnings. Factors such as a company’s growth prospects, profitability, risk profile, and industry dynamics all shape what investors are willing to pay per euro of earnings. Usually, higher growth and lower risk companies command a higher PE.

Iren’s current PE stands at 10.92x, which is noticeably lower than the peer average of 13.01x and far below the Integrated Utilities industry average of 18.08x. At first glance, this could make the stock appear attractively valued. However, these comparisons can miss company-specific traits. This is where Simply Wall St’s Fair Ratio comes in. This proprietary measure considers a wider set of factors, including Iren’s earnings growth, risks, profit margins, and market capitalization, providing a more tailored benchmark. For Iren, the Fair Ratio is calculated at 13.76x, just slightly above its actual PE. With a difference of less than 0.10, this suggests the market is already pricing Iren about right given its unique profile and outlook.

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 Iren Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, approachable way to bring your investment story to life. You outline why you think a company like Iren will succeed or struggle, map out your own assumptions for things like revenue growth and profit margins, and then see how that story translates into a financial forecast and fair value estimate.

Narratives connect a company's evolving story, such as business strategy, market changes, and risks, directly to the numbers investors care most about. On Simply Wall St's Community page, millions of investors use Narratives as an accessible tool to set out their expectations, check Fair Value versus current Price, and decide when to buy or sell. All of this is dynamically updated as new information comes in, including news or earnings releases.

This means you can always sense-check your outlook and investment decisions, not just based on the share price, but on your own view of Iren's future. For example, some investors see Iren’s upgrades and green investments justifying a bullish price target of €2.95, while others, noting rising competition and regulatory risks, estimate a more cautious value of €2.00. Ultimately, Narratives empower you to invest with more clarity, realism and confidence.

Do you think there's more to the story for Iren? 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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