Pampa Energia's Segments Are Hamstrung Until New Regulations Are Implemented

Summary

• Pampa Energia's 2Q24 results show stagnation in key segments, with minor growth and significant tariff adjustments for equity holdings but no new expansion plans.
• Despite a 20% stock appreciation, PAM remains fairly valued with limited growth potential due to infrastructure constraints and political uncertainties, maintaining a Hold rating.
• The gas and oil segments face production challenges, with no new projects in power generation and an $80 million impairment loss imposed by the government.
• Valuation metrics indicate a fair EV/NOPAT multiple of 8x to 10x, but regulatory changes and debt refinancing risks persist, justifying the Hold rating.

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This article analyzes Pampa Energia's (NYSE:PAM) (OTCPK:PPENF) 2Q24 results and earnings call. It also reviews the company's valuation and my rating from a Hold in my last article (and consistently since January 2022).

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.