ERG SPA (ERG.MI) Stock Fundamental Analysis
Europe - Euronext Milan - BIT:ERG - IT0001157020 - Common Stock
22.6 EUR
+0.02 (+0.09%)
We assign a fundamental rating of 5 out of 10 to ERG. ERG was compared to 22 industry peers in the Independent Power and Renewable Electricity Producers industry. While ERG has a great profitability rating, there are some minor concerns on its financial health. ERG has a valuation in line with the averages, but it does not seem to be growing. ERG also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year ERG was profitable.
- In the past year ERG had a positive cash flow from operations.
- ERG had positive earnings in each of the past 5 years.
- Each year in the past 5 years ERG had a positive operating cash flow.
1.2 Ratios
- With a decent Return On Assets value of 3.69%, ERG is doing good in the industry, outperforming 72.73% of the companies in the same industry.
- The Return On Equity of ERG (10.40%) is better than 72.73% of its industry peers.
- ERG's Return On Invested Capital of 5.33% is fine compared to the rest of the industry. ERG outperforms 77.27% of its industry peers.
- ERG had an Average Return On Invested Capital over the past 3 years of 4.72%. This is in line with the industry average of 5.29%.
- The 3 year average ROIC (4.72%) for ERG is below the current ROIC(5.33%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.69% | ||
| ROE | 10.4% | ||
| ROIC | 5.33% |
ROA(3y)4.55%
ROA(5y)3.78%
ROE(3y)11.87%
ROE(5y)10.57%
ROIC(3y)4.72%
ROIC(5y)3.97%
1.3 Margins
- ERG's Profit Margin of 19.28% is amongst the best of the industry. ERG outperforms 86.36% of its industry peers.
- ERG's Profit Margin has improved in the last couple of years.
- ERG's Operating Margin of 33.37% is amongst the best of the industry. ERG outperforms 90.91% of its industry peers.
- ERG's Operating Margin has improved in the last couple of years.
- ERG's Gross Margin of 98.63% is amongst the best of the industry. ERG outperforms 100.00% of its industry peers.
- In the last couple of years the Gross Margin of ERG has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 33.37% | ||
| PM (TTM) | 19.28% | ||
| GM | 98.63% |
OM growth 3Y4.11%
OM growth 5Y13.88%
PM growth 3Y-4.11%
PM growth 5Y52.35%
GM growth 3Y-0.12%
GM growth 5Y6.64%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so ERG is still creating some value.
- The number of shares outstanding for ERG has been reduced compared to 1 year ago.
- The number of shares outstanding for ERG has been reduced compared to 5 years ago.
- Compared to 1 year ago, ERG has a worse debt to assets ratio.
2.2 Solvency
- ERG has an Altman-Z score of 1.52. This is a bad value and indicates that ERG is not financially healthy and even has some risk of bankruptcy.
- ERG's Altman-Z score of 1.52 is fine compared to the rest of the industry. ERG outperforms 63.64% of its industry peers.
- ERG has a debt to FCF ratio of 9.46. This is a negative value and a sign of low solvency as ERG would need 9.46 years to pay back of all of its debts.
- ERG has a better Debt to FCF ratio (9.46) than 77.27% of its industry peers.
- A Debt/Equity ratio of 1.30 is on the high side and indicates that ERG has dependencies on debt financing.
- ERG has a Debt to Equity ratio (1.30) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.3 | ||
| Debt/FCF | 9.46 | ||
| Altman-Z | 1.52 |
ROIC/WACC1.12
WACC4.76%
2.3 Liquidity
- ERG has a Current Ratio of 1.71. This is a normal value and indicates that ERG is financially healthy and should not expect problems in meeting its short term obligations.
- ERG's Current ratio of 1.71 is in line compared to the rest of the industry. ERG outperforms 50.00% of its industry peers.
- A Quick Ratio of 1.65 indicates that ERG should not have too much problems paying its short term obligations.
- ERG has a Quick ratio (1.65) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.71 | ||
| Quick Ratio | 1.65 |
3. Growth
3.1 Past
- ERG shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -36.52%.
- Measured over the past years, ERG shows a very strong growth in Earnings Per Share. The EPS has been growing by 43.27% on average per year.
- The Revenue has decreased by -3.11% in the past year.
- ERG shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -6.29% yearly.
EPS 1Y (TTM)-36.52%
EPS 3Y3.62%
EPS 5Y43.27%
EPS Q2Q%-39.18%
Revenue 1Y (TTM)-3.11%
Revenue growth 3Y7.06%
Revenue growth 5Y-6.29%
Sales Q2Q%-0.99%
3.2 Future
- Based on estimates for the next years, ERG will show a decrease in Earnings Per Share. The EPS will decrease by -1.76% on average per year.
- ERG is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.19% yearly.
EPS Next Y-9.19%
EPS Next 2Y3.83%
EPS Next 3Y2.4%
EPS Next 5Y-1.76%
Revenue Next Year6.13%
Revenue Next 2Y6.32%
Revenue Next 3Y4.91%
Revenue Next 5Y5.19%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 15.69, the valuation of ERG can be described as correct.
- Based on the Price/Earnings ratio, ERG is valued cheaper than 81.82% of the companies in the same industry.
- ERG is valuated rather cheaply when we compare the Price/Earnings ratio to 27.25, which is the current average of the S&P500 Index.
- Based on the Price/Forward Earnings ratio of 15.60, the valuation of ERG can be described as correct.
- Based on the Price/Forward Earnings ratio, ERG is valued a bit cheaper than 68.18% of the companies in the same industry.
- ERG's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.98.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.69 | ||
| Fwd PE | 15.6 |
4.2 Price Multiples
- ERG's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. ERG is cheaper than 63.64% of the companies in the same industry.
- Based on the Price/Free Cash Flow ratio, ERG is valued cheaply inside the industry as 81.82% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.99 | ||
| EV/EBITDA | 7.93 |
4.3 Compensation for Growth
- ERG has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.36
EPS Next 2Y3.83%
EPS Next 3Y2.4%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 4.41%, ERG is a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 2.26, ERG pays a better dividend. On top of this ERG pays more dividend than 90.91% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, ERG pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.41% |
5.2 History
- The dividend of ERG is nicely growing with an annual growth rate of 6.57%!
Dividend Growth(5Y)6.57%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
- 72.21% of the earnings are spent on dividend by ERG. This is not a sustainable payout ratio.
- ERG's earnings are declining while the Dividend Rate has been growing. This means the dividend growth is most likely not sustainable.
DP72.21%
EPS Next 2Y3.83%
EPS Next 3Y2.4%
ERG SPA / ERG.MI FAQ
What is the ChartMill fundamental rating of ERG SPA (ERG.MI) stock?
ChartMill assigns a fundamental rating of 5 / 10 to ERG.MI.
Can you provide the valuation status for ERG SPA?
ChartMill assigns a valuation rating of 6 / 10 to ERG SPA (ERG.MI). This can be considered as Fairly Valued.
What is the profitability of ERG stock?
ERG SPA (ERG.MI) has a profitability rating of 8 / 10.
What is the financial health of ERG SPA (ERG.MI) stock?
The financial health rating of ERG SPA (ERG.MI) is 4 / 10.
How sustainable is the dividend of ERG SPA (ERG.MI) stock?
The dividend rating of ERG SPA (ERG.MI) is 7 / 10 and the dividend payout ratio is 72.21%.