Bloomberg

INDIVIDUAL ASSIGNMENT: ENEL COMPANY SNAPSHOT

MANFREDI SOPRANI
ENEL – Company Overview

Enel reports 6 business segments:

• Thermal generation and trading (ca. 30% of
Revenues)
• End-user markets (ca. 35% of Revenues)
• Infrastructure and Networks ( ca. 20% of
Revenues)
• Enel Green Power (ca. 10% of Revenues)
• Enel X and Services (ca. 5% of Revenues)

Strategy for the future:

• Progressive shift to the generation of energy
through renewable sources
• Progressive shift to digitalization of infrastrucures
• The developed business model allows Enel great
flexibility in the use of capital
ELECTRIC UTILITIES – INDUSTRY
LANDSCAPE
Market Performance Outlook Market Growth Opportunities
GAS UTILITIES – INDUSTRY LANDSCAPE
Price and Supply Outlook Demand Outlook
 ENEL – FINANCIALS AND VALUATION
Ene l S pA (ENEL IM) - Ente rpris e Value Ene l S pA (ENEL IM) - Pro fitability
In Millions of US D e xc e pt Pe r S hare FY 2016 FY 2017 FY 2018 FY 2 019 FY 2020 Curre nt
In Millions o f US D e x c e pt Pe r S ha re FY 20 16 FY 20 1 7 FY 2 01 8 FY 2 0 19 FY 20 2 0
12 Months Ending 12/31/2016 1 2/31/2017 12/31/2018 12 /31/2 019 12/31/2020 03/29/2021
Marke t Capitalization 44.907,1 62.700,8 58.726,7 80 .722,8 102.86 0,5 101.264,9
1 2 Mo nths Ending 1 2 /3 1 /20 16 1 2/3 1/20 1 7 1 2 /3 1 /2 01 8 1 2/3 1 /2 0 19 12 /3 1/20 2 0
- Cash & Equivalents 9.878,3 9.419,2 12.599,5 14.972,7 13.470,7 13.470,7 Re turns
+ Preferred Equity 0,0 0,0 0,0 0,0 0,0 0,0 Return on Common Equity 7,65 10,86 14,40 7,00 8,89
+ Minority Interest 18.744,1 20.877,4 18.474,4 18.596,3 17.154,1 17.154,1 Return on Assets 1,62 2,43 2,99 1,29 1,56
+ Total Debt 55.219,9 62.859,4 64.092,3 69.905,0 72.927,0 72.927,0 Return on Capital 5,29 6,81 7,95 5,23 6,25
Ente rpris e Value 108.992,8 137.018,4 128.693,8 1 54 .251,4 179.47 0,9 177.879,6 Return on Invested Capital 5,43 6,62 7,07 5,08 5,17

Total Capital 110.670,7 125.567,4 118.892,4 1 22 .611,7 124.70 8,4 124.708,4

Ma rg ins
Total Debt/Total Capital 49,90 50,06 53,91 57,01 58,48 58,48
Total Debt/EV 0,51 0,46 0,50 0,45 0,41 0,40
EBITDA Margin 22,27 21,54 20,86 21,40 24,80
Operating Margin 13,00 13,48 13,54 8,89 13,36
EV/S ale s 1,51 1,57 1,54 1,78 2 ,34 2,37 Incremental Operating Margin — 21,45 22,98 — —
EV/EBITDA 6,76 7,28 7,37 8,30 9 ,45 9,57 Pretax Margin 8,43 9,92 11,21 5,57 8,72
EV/EBIT 11,58 11,64 11,35 19,97 17 ,54 17,77 Income before XO Margin 5,52 7,33 8,68 4,49 5,78
EV/Cas h Flow to Firm 8,91 9,56 8,64 10,29 10 ,14 11,24 Net Income Margin 3,75 5,20 6,55 2,81 4,17
EV/Fre e Cas h Flow to Firm 28,12 24,24 18,44 26,88 23 ,86 30,33
Net Income to Common Margin 3,75 5,20 6,55 2,81 4,17

Dilute d Marke t Cap 44.064,2 62.700,8 58.726,7 80 .732,4 102.84 4,8 101.249,5
Dilute d Ente rpris e Value 108.149,8 137.018,4 128.693,8 1 54 .261,0 179.45 5,2 175.039,9
Additio nal
EV pe r S hare 10,72 13,48 12,66 15,17 17 ,65 17,65 Effective Tax Rate 34,48 26,10 22,57 19,39 33,70
Dvd Payout Ratio 71,21 63,77 59,44 153,37 139,46
Trailing 1 2 Mo nth Value s for Ratios Sustainable Growth Rate 2,20 3,93 5,84 -3,74 -3,51

• The company is showing an increase in profitability as we can notice by analysing the ratios provived on
the top-right table
• The EBITDA margin is has been increasing over the last 3 years confirming the positive growth in terms of
profitability from operating activities
• In terms of valuation we should analyse the EV/SALES multiple of the firm which showed a positive trend
over the last 3 years meaning that the Enterprise Value of the firm has increased over this period
ENEL – FINANCIALS AND VALUATION

• The Revenues of the company are expected to rebound in 2021 after the downturn caused by the COVID 19
pandemic (top left table)
• The EPS instead has showed a constant increase in the last 4 years denoting the good performance of the
company on the stock market
• Moreover, if we compare Enel stock to the FTSEMIB returns, we can notice that the company has been
outperforming the index since September 2018
ENEL – CRPR OUTLOOK AND RISK ANALYSIS
ENEL – CAPITAL STRUCTURE

• The company is highly leveraged but given the

characteristic of the utility industry (which is a
capital intensive industry) high levels of
indebtness are quite normal
• Moreover, the majority of the debt its long term
(ca. 83%) and hence bear less risk given the
expected increase in profitability of Enel expected
in the next years
ENEL – REASONS TO INVEST/NOT INVEST
REASONS TO INVEST:
 Global leader in the implementation of
energy transition, with an integrated
business model and a geographically
diversified footprint
 Strong cashflow generation is a
remarkable feature of the company
 Expected positive growth of the utility
sector envisaged for the next 10 years
REASONS TO NOT INVEST:
 The pandemic could delay the positive
outlooks envisaged for the utility sector
 The company has announced a €40bn
capex plan to be carried out between
2021-2023 hence confirming the long
term strategy of the company
 Enel earnings could be threatened by the
devaluation of the Latin American
currencies, where the company has a
strong presence