Multiples are indicators that relate one series of variables referring to a single security in order to make it easily and quickly comparable with the respective competitors on the market. These indicators can be a useful tool for investors and a quick and easy way to calculate the intrinsic or fundamental value of a stock. In this article we focus on the multiples of the utilities sector of Piazza Affari, in particular of the Ftse Mib.
The multiples of the Ftse Mib utility giants
The Ftse Mib is the reference index of the Italian stock market and within it also contains stocks active in the utility sector (public services). There are seven utility stocks that are part of the Ftse Mib: they are Enel, A2a, Terna, Hera, Erg, Italgas and Snamwith an overall market cap of 106.8 billion and an incidence of 14.9% on the total (data as of 24 April 2024).
The following table shows the best-known multiples:
price/book value (P/BV) earnings per share (EPS) price/earnings per share (P/E) enterprise value/gross operating margin (enterprise value/earnings before Interest taxes depreciation and amortisation, EV/EBITDA) enterprise value/earnings before Interest and taxes, EV/EBIT
Title
Last price (€)
Market Cap (€ mld)
P/BV
EPS
P/E
EV/EBITDA
EV/EBIT
Enel 6.1 62 1.95 0.6 16.13 7.26 12.93 A2a 1.8 5.6 1.33 0.21 8.61 5.99 10.71 Terna 7.56 15.2 2 ,4 0.44 15.42 11.07 17.99 Hera 3.33 5 1.44 0.28 10.92 6.76 11.02 Erg 24.32 3.7 1.68 1.46 16.16 10.09 17.55 Italgas 5.15 4.2 1.83 0.54 9.5 9.27 16.39 Snam 4.35 14.6 1.91 0.35 12.86 12.63 23.83
Source Bloomberg, elaborated by the FinanzaOnline Research Office; data updated as of 04/24/2024
Please remember that each individual company has its own peculiarities and, therefore, the selection activity cannot ignore the in-depth analysis of each individual investment theme.
The multiples linked to the price
As we have said, market multiples are used in comparative analysis with the aim of comparing the positioning of a company compared to its competitors. For simplicity we will distinguish them into multiples relative to the stock market price and multiples relative to the value of the company. The former are relationships between the market prices (quotations) of an equity instrument and a given balance sheet quantity. The most commonly used financial statement figures are profits and book value of equity. Price multiples are the most used by investors and allow you to quickly understand how the market views the company and what value it attributes to it at a given moment.
Il P/BV (price to book value) represents the ratio between the market value of a company’s equity and its book value. This multiple depends on the profitability of equity, expressed as ROE (Return on Equity). A high ROE usually corresponds to a high P/BV, and vice versa. P/BV is especially useful for comparing similar companies within the same industry that follow the same accounting principles. It is important to note that this multiple cannot be used to compare companies in different industries or with different accounting standards.
L‘EPS (earnings per share) represents a company’s net income divided by the total number of shares outstanding in a given year.
Il P/E (price to earnings) iIndicates how many times the share price reflects expected earnings. A higher P/E generally corresponds to higher expected earnings growth (EPS), while a lower P/E may indicate more modest expected growth or greater uncertainties about the predictability of future earnings. A low growth rate coupled with high P/Es should warn investors, while significant growth with low P/Es could attract traders.
The multiples linked to the value of the company
Unlike the previous ones, i multiples linked to the value of the company represent a valuation method of a listed company which corresponds to the stock market capitalization plus net financial debt.
L’Enterprise Value (EV) it is calculated with the following formula: market capitalization + net debt or – net liquidity. EV is a good indicator in the case of acquisitions, as it takes into account the debt that the buyer will have to take on. A company with a low EV can be seen as a good candidate for an acquisition.
L’EV/EBITDA (enterprise value/earnings before Interest taxes depreciation and amortisation) it is a market multiple given by the ratio between the value of a company and the gross operating margin. It represents the price that should be paid in the case of acquisition of the company without debt.
L’EV/EBIT (enterprise value/earnings before Interest and taxes) it is a market multiple given by the ratio between the value of a company and the net operating margin. Compared to the previous one, this multiple subtracts all depreciation and provisions, offering a better estimate of free cash flows compared to Ebitda.
The lower the EV/EBITDA or EV/EBIT ratio, the better the company is undervalued by the marketcompared of course to comparable companies.
Finally, it should be noted that financial analysts also use multiples to calculate the so-called “target price” of a specific stock. In fact, among the best-known company valuation methods we find the comparison of multiples (P/E, EV/EBITDA or others, with a sample of comparable companies). For financial stocks, analysts usually compare ROE, cost of capital and P/BV (price to book value).
Related
Russia ratified that there is no prohibition on the entry of carnations from Ecuador
– 2024-04-25 17:30:19
In writing, the Federal Veterinary and Phytosanitary Control Service of Russia, Rosselkhoznadzor, confirmed at the Ecuadorian Embassy in that country that there is no prohibition on the entry of carnations from Ecuador.
The notification arrived at the Ecuadorian diplomatic headquarters in Russia on Friday, March 22, according to a statement from the Ministry of Production, Foreign Trade, Investment and Fisheries.
“The Federal Veterinary and Phytosanitary Control Service of Russia, on March 22, 2024, ratified in writing to the Embassy of Ecuador in said country that it has not imposed any prohibition on the import of carnations that arrive directly from national territory. “, reads the statement from the Ministry of Production.
The document from the State portfolio indicates that Ecuador is one of the most important suppliers of flowers, roses and carnations due to its variety to Russia, thus also making this market the main destination for this production.
Likewise, they highlight that the Ecuadorian flower sector is recognized on a global scale for its highly technical and high-quality processes, which allows us to obtain products with the highest standards that world markets demand.
At the beginning of last February, after the suspension of five Ecuadorian companies for the export of bananas was announced, there was also mention of an alleged suspension of the export of carnations, however, this information was clarified by the Phyto and Zoosanitary Regulation and Control Agency. (Agrocalidad), in the sense that there is no suspension or restrictions on the export of carnations, after holding high-level technical meetings with representatives of the Federal Service for Veterinary and Phytosanitary Control of Russia.
The suspension of the five banana exporters was lifted in mid-February, after the authorities of Ecuador and Russia met. (YO)
Source: KCH
Industrial shipments start 2024 on the right foot according to ADEX
Peruvian manufacturing exports amounted to US$ 506 million 406 thousand in January of this year, reflecting an increase of 5.6% compared to the same month in 2023 (US$ 479 million 507 thousand), due to the greater demand from the chemical and iron and steel sectors. reported the Manufacturing Management of the Association of Exporters (ADEX).
Although it is an encouraging start, the union’s Manufacturing Manager, Melissa Vallebuona Peña, explained that 3 of its sectors continue to be negative: textile, clothing and metalworking, while the other 3 showed growth: chemical, steel metallurgy and ‘miscellaneous’ ( jewelry, crafts, stationery and others).
“Companies were quite resilient in the face of internal and external crises. It is encouraging that, after several months of decline, they are starting the year well, but it is just beginning and it is still too early to project a sustained recovery,” he indicated.
In figures
With a representation of 32% of the total, the most important item of industrial exports was chemicals (US$ 161 million 372 thousand) with an increase of 19.1%. Its main items were lemon essential oils, sulfuric acid, propylene polymer plates, ethylene polymer plates, color lakes, among others, while its leading markets were the US, Bolivia, Ecuador and Colombia.
Steel metallurgy (US$ 134 million 311 thousand) represented 26.5% of manufacturing shipments and increased its demand by 21.7%. Among its first destinations are the USA, Colombia, Brazil, Mexico and Ecuador. Its most representative products were refined copper wire, unalloyed zinc, iron or unalloyed steel bars, other refined copper sheets and strips, and refined copper bars and profiles.
Apparel (US$ 92 million 937 thousand) closed down with -15.8%. His offer was led by t-shirts cotton, knitted undershirts and knitted shirts, among others. The US concentrated 69.8% of that supply, followed by Brazil, France, Canada and Chile.
Metalworking (US$ 48 million 109 thousand) contracted by -8.6%. Among its leading items were cars for more than 16 people, parts of machines and devices, drilling or drilling machines and windshields, which went to Chile, the United States, Bolivia, Ecuador and Colombia.
The ‘miscellaneous’ item reached US$ 37 million 768 thousand, reflecting a positive variation of 3.7% and reaching markets such as the US, Chile, Bolivia, Ecuador and Colombia. Jewelry items, advertising prints, and felt-tip pens and markers were in the top 3 of their offering.
Finally, textiles (U$ 31 million 905 thousand) decreased -6.7%. Fine carded or combed alpaca hair, wool yarn and other dyed cotton knitted fabrics were its most sought-after products. China, the US, Colombia, Italy and Bolivia stood out for their largest orders.
#Industrial #shipments #start #foot #ADEX
– 2024-04-25 17:17:29
Related posts:
Industrial shipments start 2024 on the right foot according to ADEX