Italgas S.p.A. (IG) AI Stock Analysis

• Market Cap: €7.75B
• Dividend Yield: 5%
• Average Volume (3M): 2.56M
• Price to Earnings (P/E): 13.6
• Beta (1Y): 0.44
• Revenue Growth: -3.34%
• EPS Growth: 8.88%
• Country: IT
• Employees: 6,500
• Sector: Utilities
• Sector Strength: 62
• Industry: Regulated Gas
• EPS (TTM): 0.20
• Shares Outstanding: 1,014,692,400
• 10 Day Avg. Volume: 2,105,728
• 30 Day Avg. Volume: 2,564,154
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €7.59
• Price Target Upside: -0.65% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 79 Outperform
• Price Target: €8.00 ▲(4.71% Upside)

Italgas S.p.A.'s strong financial performance, particularly in profitability and cash flow, combined with attractive valuation metrics, drive a favorable stock score. While the technical indicators suggest positive momentum, caution is advised due to potential overbought conditions and high leverage.

Positive Factors

Acquisition

Italgas' acquisition of 2i Rete Gas represents an equity story transformation, driving top line growth and presenting a compelling cost synergy opportunity.

Dividend and EPS

Italgas presents an attractive combination of both dividend yield and EPS growth.

Market Position

The combination of Italgas and 2i Rete results in a national champion gas distributor with ~50% market share.

Negative Factors

Cost Efficiencies

Meaningful operating cost efficiencies and synergies are expected to drive margin expansion and enhance earnings growth.

Synergies Expectation

The company's CMD is seen as a key catalyst, with expectations for an integration update and indication of initial synergies.

Italgas S.p.A. Business Overview & Revenue Model

Company Description

Italgas S.p.A., together with its subsidiaries, engages in the distribution of natural gas in Italy. It is involved in the transportation of gas through local pipeline networks from the delivery points at the reduction and measurement stations interconnected with the transport networks to the points of final delivery to households, enterprises, etc. The company operated a distribution network of 74,397 kilometers. It also engages in metering activities; and distributes and sells water. The company was founded in 1837 and is based in Milan, Italy.

How the Company Makes Money

Italgas generates revenue primarily through the distribution of natural gas to its customers. The company's revenue model is built on regulated tariffs set by the Italian regulatory authority, which ensures stable income from its operations. Key revenue streams include fees charged for the transportation and distribution of gas, as well as investments in infrastructure projects that are often subsidized by government programs or incentives. Additionally, Italgas may benefit from partnerships with energy suppliers and local governments, participating in initiatives aimed at promoting energy efficiency and the transition to renewable energy sources. These collaborations can enhance its service offerings and create new revenue opportunities. The company's consistent focus on innovation and sustainability also positions it well to capitalize on future trends in the energy sector.

Italgas S.p.A. Financial Statement Overview

Summary

Italgas S.p.A. demonstrates strong profitability and cash flow generation with a high gross profit margin and positive free cash flow growth. However, inconsistent revenue growth and high leverage pose risks to financial stability.

Income Statement

Italgas S.p.A. has demonstrated solid profitability with a strong gross profit margin of 88.83% and a net profit margin of 18.90% for 2024. However, the revenue growth has been inconsistent, showing a decline in 2024 compared to previous years. The EBIT and EBITDA margins remain robust at 30.87% and 53.51%, respectively, indicating efficient operational management despite the revenue dip.

Balance Sheet

The company's balance sheet presents a mixed picture. The debt-to-equity ratio is high at 2.92, reflecting significant leverage. However, the return on equity stands at 19.48%, indicating good profitability for equity holders. The equity ratio is relatively low at 20.53%, suggesting a heavy reliance on debt financing, which could pose risks if not managed carefully.

Cash Flow

Italgas S.p.A. shows a strong improvement in cash flows, with a positive free cash flow growth rate of 171.28% from 2023 to 2024. The operating cash flow to net income ratio is 2.29, highlighting efficient cash generation from operations relative to net income. The free cash flow to net income ratio is 0.43, indicating a healthy conversion of net income into free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.31B	2.51B	2.61B	2.18B	2.10B	2.06B
Gross Profit	2.12B	1.72B	1.62B	745.46M	721.78M	781.68M
EBITDA	1.21B	1.36B	1.20B	1.12B	1.03B	1.05B
Net Income	413.79M	478.85M	439.57M	407.29M	362.81M	384.63M
Balance Sheet
Total Assets	17.86B	11.97B	11.14B	11.03B	10.15B	9.12B
Cash, Cash Equivalents and Short-Term Investments	386.90M	362.85M	267.19M	451.95M	1.39B	664.14M
Total Debt	11.37B	7.19B	6.92B	6.55B	6.38B	5.41B
Total Liabilities	14.05B	9.18B	8.54B	8.64B	8.01B	7.15B
Stockholders Equity	3.48B	2.46B	2.28B	2.11B	1.89B	1.74B
Cash Flow
Free Cash Flow	-293.91M	206.05M	-289.23M	-229.06M	20.05M	14.61M
Operating Cash Flow	896.03M	1.10B	572.67M	548.17M	839.63M	761.66M
Investing Cash Flow	-2.74B	-809.13M	-857.60M	-1.28B	-813.74M	-771.63M
Financing Cash Flow	-274.64M	-136.88M	82.95M	-209.17M	701.84M	411.75M

Italgas S.p.A. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 7.64
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IT:IG, the sentiment is Positive. The current price of 7.64 is above the 20-day moving average (MA) of 7.59, above the 50-day MA of 7.32, and above the 200-day MA of 6.09, indicating a bullish trend. The MACD of 0.09 indicates Positive momentum. The RSI at 57.39 is Neutral, neither overbought nor oversold. The STOCH value of 39.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IT:IG.

Italgas S.p.A. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IG	79 Outperform	€7.75B	13.60	20.21%	5.00%	-3.34%	8.88%
Sector *	66 Neutral	$17.25B	17.87	5.54%	3.65%	6.63%	11.55%
0N54	―	€6.63B	7.95	16.17%	―	―	―
0MHD	―	€4.21B	10.89	14.47%	―	―	―
0DME	―	€666.38M	8.08	9.67%	―	―	―
0MUN	―	€3.24B	10.59	9.99%	―	―	―
0NQP	―	€17.28B	12.23	17.62%	―	―	―