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Erg SPA (IT:ERG)
:ERG

Erg SPA (ERG) AI Stock Analysis

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Erg SPA

(LSE:ERG)

Rating:67Neutral
Price Target:
Erg SPA has strong operational efficiency and prudent financial management, but the decline in revenue and fluctuating cash flows pose challenges to financial health. The technical indicators suggest bearish market sentiment, though the company's valuation is attractive with a reasonable P/E ratio and a high dividend yield. The stock score reflects a mix of stable core operations and potential market concerns.
Positive Factors
Future Earnings Potential
The company expects EBITDA to materially improve due to full-year consolidation of US assets and new organic capacity.
Market Position
Current share price is not reflecting the company financial visibility, thus offering a good entry point for investors.
Sector Outlook
The environment in the renewables sector is improving materially.
Negative Factors
Guidance Adjustment
The company's FY24 EBITDA guidance was narrowed due to exceptionally poor wind conditions.
International Market Challenges
Lower power prices abroad affected the company's estimates, leading to a decrease in FY24E EBITDA and adjusted net income.
Pricing Challenges
Lower production abroad due to pricing challenges has impacted the company's financial forecasts.

Erg SPA (ERG) vs. iShares MSCI Italy ETF (EWI)

Erg SPA Business Overview & Revenue Model

Company DescriptionERG S.p.A., through its subsidiaries, produces energy through renewable sources in Italy, France, Germany, Poland, Bulgaria, and Romania. The company generates electricity through wind, solar, hydroelectric, and thermoelectric power plants, as well as natural gas cogeneration plants. As of December 31, 2021, it had wind farms installed capacity of 2,198 MW; solar plants installed capacity of 220 MW; hydroelectric plants installed capacity of 527 MW; and thermoelectric plants installed capacity of 480 MW. The company was founded in 1938 and is headquartered in Genoa, Italy. ERG S.p.A. is a subsidiary of San Quirico S.p.A.
How the Company Makes MoneyERG S.p.A. generates revenue through the production and sale of electricity derived from renewable energy sources. The company operates wind farms, solar plants, and hydroelectric facilities, selling the electricity they produce to national grids and energy markets. Additionally, ERG benefits from government incentives and subsidies for renewable energy production, which further support its earnings. Key partnerships with technology providers and energy companies enhance its operational capabilities and market reach, contributing to its financial performance.

Erg SPA Financial Statement Overview

Summary
Erg SPA maintains stable profitability and operational efficiency but faces challenges with declining revenues and fluctuating cash flows. The balance sheet reflects prudent financial management with moderate leverage. Overall, the company shows resilience but needs to address revenue growth to improve financial health.
Income Statement
65
Positive
Erg SPA shows a stable gross profit margin, indicating efficient cost management. However, the net profit margin has been decreasing due to rising expenses, and revenue has declined over the last few years. Despite this, the EBIT and EBITDA margins are relatively healthy, suggesting robust operational performance.
Balance Sheet
70
Positive
The company's debt-to-equity ratio is moderate, reflecting balanced leverage. The equity ratio indicates a strong asset base, but there has been a decline in total assets over time. Return on equity has been fluctuating, indicating variability in generating returns for shareholders.
Cash Flow
68
Positive
The operating cash flow is strong relative to net income, which signifies good cash-generating ability. However, free cash flow growth has been inconsistent, with significant fluctuations in capital expenditures affecting long-term cash sustainability.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue738.06M740.94M713.84M1.04B973.70M
Gross Profit550.06M575.81M408.41M480.99M511.45M
EBITDA534.00M568.48M462.82M375.92M389.69M
Net Income175.00M178.67M378.94M81.90M107.89M
Balance Sheet
Total Assets6.32B5.20B5.33B6.00B4.53B
Cash, Cash Equivalents and Short-Term Investments0.00709.26M392.81M1.44B740.41M
Total Debt3.09B2.34B2.28B3.54B2.22B
Total Liabilities4.09B3.06B3.28B4.44B2.76B
Stockholders Equity2.15B2.13B2.05B1.56B1.76B
Cash Flow
Free Cash Flow250.24M576.75M82.30M-242.15M298.96M
Operating Cash Flow484.17M882.52M429.78M30.59M410.74M
Investing Cash Flow-707.13M-316.54M758.84M-727.27M-167.65M
Financing Cash Flow356.35M-491.22M-1.67B901.46M-241.05M

Erg SPA Technical Analysis

Technical Analysis Sentiment
Positive
Last Price18.70
Price Trends
50DMA
17.83
Positive
100DMA
17.40
Positive
200DMA
18.70
Negative
Market Momentum
MACD
0.24
Positive
RSI
56.21
Neutral
STOCH
44.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IT:ERG, the sentiment is Positive. The current price of 18.7 is below the 20-day moving average (MA) of 18.77, above the 50-day MA of 17.83, and below the 200-day MA of 18.70, indicating a neutral trend. The MACD of 0.24 indicates Positive momentum. The RSI at 56.21 is Neutral, neither overbought nor oversold. The STOCH value of 44.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IT:ERG.

Erg SPA Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
ITERG
67
Neutral
€2.78B14.558.74%4.64%-0.39%6.12%
67
Neutral
€8.43B18.516.19%2.70%2.33%-39.06%
€899.73M9.3627.86%3.18%
€5.88B11.5013.57%3.73%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
IT:ERG
Erg SPA
18.70
-3.45
-15.56%
GB:0P3O
Alerion CleanPower
17.20
0.76
4.62%
GB:0NVV
HERA S.p.A.
4.07
0.94
30.03%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Apr 08, 2025