Engie: Earnings Reversal Could Bring About Excellent Returns

(14min)

Summary

  • Engie is a complex integrated utility with significant regulated exposure, including the French gas network, and is transitioning towards regulated electricity and renewables.
  • The company is expected to see earnings declines in 2024-2025, but stabilization is forecasted for 2026-2027, with a dividend yield around 5-9%.
  • Engie trades at a discounted valuation with a BBB+ rating and a P/E of 7.3x, presenting a market-beating return potential.
  • Despite potential lower dividends and French governmental stake risks, I maintain a "Buy" rating with a €16.2/share target, seeing minimal downside.
  • Looking for more investing ideas like this one? Get them exclusively at iREIT®+HOYA Capital. Learn More »

ENGIE North America headquarters in Houston, Texas, USA

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Dear readers/followers,

Engie (OTCPK:ENGIY) is perhaps one of the more complex integrated utilities that I cover on Seeking Alpha due to its generation mix. Comparable companies to this one include two of the more prominent ones on my

The company discussed in this article is only one potential investment in the sector. Members of iREIT on Alpha get access to investment ideas with upsides that I view as significantly higher/better than this one. Consider subscribing and learning more here.

This article was written by

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Wolf Report is a senior analyst and private portfolio manager with over 10 years of generating value ideas in European and North American markets.

He is a contributing author and analyst for the investing group iREIT®+HOYA Capital and Wide Moat Research LLC where in addition to the U.S. market, he covers the markets of Scandinavia, Germany, France, UK, Italy, Spain, Portugal and Eastern Europe in search of reasonably valued stock ideas.

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of ENGIY, ENLAY, RWEOY, IBDRY either through stock ownership, options, or other derivatives. 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.

While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment. Short-term trading, options trading/investment and futures trading are potentially extremely risky investment styles. They generally are not appropriate for someone with limited capital, limited investment experience, or a lack of understanding for the necessary risk tolerance involved. I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles. I own the Canadian tickers of all Canadian stocks I write about. Please note that investing in European/Non-US stocks comes with withholding tax risks specific to the company's domicile as well as your personal situation. Investors should always consult a tax professional as to the overall impact of dividend withholding taxes and ways to mitigate these.

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