What the Latest Mozambique LNG News Means for Galp Energia SGPS Valuation in 2025

If you have been watching Galp Energia SGPS lately, you are not alone in weighing what to do with this energy stock. Investors have seen a steady climb in the share price, with a solid increase of 5.0% in the past month and a respectable 6.0% return so far this year. Zooming out, Galp Energia has delivered an impressive 81.2% gain over three years and a standout 153.0% over five years. Yet, with just a mild 3.0% advance in the last twelve months, some might wonder whether more upside could be in the cards or if the easy gains are behind us.

Much of this performance has mirrored broader trends in the European energy sector, especially as the market shifts focus toward geopolitics and energy security. While headlines swirl around global oil prices and the transition to renewables, Galp seems to be navigating the challenges and opportunities with determination. The company’s current value score is 4 out of 6, reflecting that it meets several key benchmarks for being undervalued.

But do those valuation signals mean Galp is truly cheap, or are there risks lurking behind the numbers? Up next, I will walk through how different valuation approaches can shine a light on Galp’s market price. Later on, we will explore a more insightful way to gauge whether this stock is a value opportunity or something else entirely.

Why Galp Energia SGPS is lagging behind its peers

Approach 1: Galp Energia SGPS Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is really worth by projecting its future cash flows and then discounting them back to today’s value. This approach helps investors figure out whether the current market price offers good value or not.

For Galp Energia SGPS, analysts estimate free cash flow of €585.5 Million over the last twelve months, with forecasts climbing steadily over the next several years. By 2029, projected free cash flow rises to €1.41 Billion, according to available analyst and in-house estimates. After five years, ongoing growth projections are extrapolated to give a ten-year outlook. This reflects expectations that the business will keep producing strong cash flows into the future.

Based on these projections, the current DCF analysis arrives at an estimated fair value per share of €33.79. Compared to the recent market price, this suggests the stock is trading at a 50.0% discount to its intrinsic value. In other words, the model sees significant upside potential for investors who buy at today’s levels.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Galp Energia SGPS is undervalued by 50.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Galp Energia SGPS Price vs Earnings

The price-to-earnings (PE) ratio is widely recognized as a useful valuation multiple for companies that are profitable, such as Galp Energia SGPS. By comparing the current share price to the company’s earnings per share, the PE ratio helps investors judge how much they are paying for each unit of earnings. This makes it a straightforward indicator of whether a stock offers reasonable value for its profit-generating ability.

However, what counts as a “normal” or “fair” PE ratio can vary based on several factors. Expectations for future earnings growth, the amount of risk investors perceive in the business or the sector, and overall market sentiment all shape what investors consider an appropriate PE multiple. Higher growth or lower perceived risk typically justify higher PE ratios. The opposite is also true.

Galp Energia currently trades on a PE ratio of 12.0x. That compares well with the industry average of 12.9x in the oil and gas sector and is more attractively valued than its peer group, which trades around 15.4x. However, simply comparing with peers or the broader sector does not always capture the nuances that matter most to long-term investors.

This is where Simply Wall St’s “Fair Ratio” comes in. The Fair Ratio is a proprietary assessment that combines key aspects such as the company’s forecast earnings growth, profit margin, the industry it operates in, its market cap, and overall risk profile. Compared to blunt peer or industry averages, the Fair Ratio gives a tailored benchmark for what Galp Energia’s PE ratio ideally should be.

In Galp’s case, the actual PE multiple of 12.0x is very close to the calculated Fair Ratio. This means the current valuation is about right given the company’s prospects, risks, and financial performance.

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 Galp Energia SGPS 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, yet powerful framework that lets you shape the story behind a company’s numbers by specifying your own assumptions for its future revenue, earnings, margins, and returns. Narratives connect this story to a full financial forecast, helping you see what your fair value estimate for Galp Energia SGPS could look like based on your outlook.

Available on Simply Wall St’s Community page and used by millions of investors, Narratives give you a dynamic approach to investing. As the facts and forecasts change in the market, your Narrative and the resulting valuation update automatically. This means you can easily compare your fair value with the current share price to help decide when to buy or sell, all while understanding the reasoning behind your decision.

For example, some investors see Galp Energia SGPS as undervalued and forecast strong growth ahead, while others take a more cautious stance and assign a much lower fair value. This shows how Narratives make each perspective transparent and actionable. With Narratives, you can clearly visualize your investment logic and refine it as new information emerges.

Do you think there's more to the story for Galp Energia SGPS? 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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