SNAM S.p.A. (SRG) AI Stock Analysis

• Market Cap: €18.28B
• Dividend Yield: 5.19%
• Average Volume (3M): 5.59M
• Price to Earnings (P/E): 13.1
• Beta (1Y): 0.27
• Revenue Growth: -8.04%
• EPS Growth: 30.49%
• Country: IT
• Employees: 3,971
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Gas
• EPS (TTM): 0.10
• Shares Outstanding: 3,360,858,000
• 10 Day Avg. Volume: 5,863,752
• 30 Day Avg. Volume: 5,593,757
• PEG Ratio: 0.97
• Price to Book (P/B): 1.61
• Price to Sales (P/S): 4.05
• P/FCF Ratio: -14.34
• 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: €5.35
• Price Target Upside: -4.46% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 70 Outperform
• Price Target: €5.50 ▼(-1.79% Downside)

The overall stock score reflects strong financial performance with robust profitability and operational efficiency, although revenue growth and free cash flow remain challenges. The valuation is attractive with a reasonable P/E ratio and high dividend yield. Technical analysis indicates neutral momentum, contributing to a balanced outlook.

Positive Factors

Operational Efficiency

SNAM's high profit margins indicate strong operational efficiency, which is crucial for maintaining profitability and competitive advantage in the regulated gas industry.

Profitability Relative to Equity

A strong return on equity suggests effective management and the ability to generate profits from shareholders' investments, supporting long-term financial health.

Stable Income Streams

SNAM's reliance on regulatory frameworks and long-term contracts ensures predictable revenue, enhancing financial stability and reducing risk from market volatility.

Negative Factors

Revenue Decline

A significant decline in revenue can impact SNAM's ability to invest in growth opportunities and maintain its market position, posing a challenge to future profitability.

Negative Free Cash Flow

Persistent negative free cash flow indicates ongoing cash management challenges, potentially limiting SNAM's ability to fund operations and growth without external financing.

High Leverage

High leverage can increase financial risk, especially in volatile markets, and may constrain SNAM's financial flexibility and ability to respond to industry changes.

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

Company Description

Snam S.p.A., together with its subsidiaries, engages in the operation of natural gas transport and storage infrastructure in Italy. The company operates through Natural Gas Transportation, Liquefied Natural Gas (LNG) Regasification, and Natural Gas Storage segments. It provides natural gas transportation and dispatching services with approximately 32,700 kilometers of high-and medium-pressure gas pipelines; and owns and manages LNG regasification plants. The company also offers natural gas storage services through an integrated group of infrastructure comprising deposits, wells, gas treatment and compression plants, and the operational dispatching systems; and operates nine storage concessions, including five in Lombardy, three in Emilia-Romagna, and one in Abruzzo. In addition, it engages in the lease and maintenance of fibre optic telecommunications cables, as well as provides integrated services in the natural gas mobility sector; energy efficiency solutions for residential, industrial, tertiary, and public administration sectors; and management of biogas and biomethane plants. Further, the company offers engineering and project management services; and supervision of infrastructure planning activities. It also operates in Albania, Saudi Arabia, Austria, China, Egypt, the United Arab Emirates, France, Greece, the United Kingdom, and the United States. The company was formerly known as Snam Rete Gas S.p.A. and changed its name to Snam S.p.A. in January 2012. Snam S.p.A. was founded in 1941 and is headquartered in San Donato Milanese, Italy.

How the Company Makes Money

SNAM generates revenue through several key streams. Primarily, it earns money from the transportation of natural gas, charging fees based on the volume of gas transported through its pipeline network. Additionally, the company generates income from its gas storage services, where it provides capacity to store natural gas for customers, charging for both the storage space and the services associated with managing that storage. SNAM also benefits from its regasification terminals, where it processes liquefied natural gas (LNG) for distribution. Significant partnerships with gas suppliers, utility companies, and industrial clients enhance its revenue potential, while regulatory frameworks and long-term contracts provide stable income streams. The company is also actively involved in sustainability initiatives, which may open up future revenue opportunities in renewable energy sectors.

SNAM S.p.A. Financial Statement Overview

Summary

SNAM S.p.A. demonstrates strong profitability and operational efficiency, with robust EBIT and EBITDA margins. However, the company faces challenges with declining revenues and negative free cash flow. The balance sheet reflects significant leverage, though profitability relative to equity remains strong. Overall, the company is stable but needs to address revenue growth and free cash flow.

Income Statement

The company has shown strong gross and net profit margins, with a gross profit margin of 87.8% and a net profit margin of 35.5% in 2024. However, the revenue has declined by 17.3% from 2023 to 2024, indicating potential challenges. EBIT and EBITDA margins remain robust at 47.2% and 87.4%, respectively, suggesting operational efficiency.

Balance Sheet

The debt-to-equity ratio is relatively high at 2.06, reflecting significant leverage, while the return on equity is strong at 14.1%, indicating good profitability relative to equity. The equity ratio is moderate at 24.9%, showing a balanced capital structure.

Cash Flow

The free cash flow has improved from -1.68 billion in 2023 to -1.00 billion in 2024, yet it remains negative, indicating cash flow challenges. The operating cash flow to net income ratio is 1.44, suggesting that operating cash flows cover the net income well, but the free cash flow to net income ratio is negative due to high capital expenditures.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.82B	3.55B	4.24B	3.50B	3.29B	2.75B
Gross Profit	1.91B	3.12B	2.22B	1.87B	1.78B	1.70B
EBITDA	2.34B	3.10B	2.42B	2.23B	2.26B	2.16B
Net Income	992.00M	1.26B	1.14B	671.00M	1.50B	1.10B
Balance Sheet
Total Assets	35.95B	35.79B	33.52B	32.47B	27.36B	26.13B
Cash, Cash Equivalents and Short-Term Investments	2.42B	1.81B	1.38B	1.76B	1.34B	3.04B
Total Debt	19.99B	18.36B	16.65B	13.68B	15.36B	15.94B
Total Liabilities	26.77B	26.82B	25.93B	24.95B	20.12B	19.66B
Stockholders Equity	9.14B	8.93B	7.63B	7.47B	7.20B	6.47B
Cash Flow
Free Cash Flow	-791.00M	-1.00B	-1.68B	2.79B	94.00M	431.00M
Operating Cash Flow	1.88B	1.81B	-135.00M	4.11B	1.34B	1.60B
Investing Cash Flow	-3.13B	-2.68B	-2.23B	-1.36B	-1.64B	-1.64B
Financing Cash Flow	1.14B	1.29B	1.99B	-2.32B	-1.41B	233.00M

SNAM S.p.A. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5.60
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IT:SRG, the sentiment is Positive. The current price of 5.6 is above the 20-day moving average (MA) of 5.35, above the 50-day MA of 5.19, and above the 200-day MA of 4.91, indicating a bullish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 77.58 is Negative, neither overbought nor oversold. The STOCH value of 87.46 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IT:SRG.

SNAM S.p.A. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TEN	75 Outperform	€18.60B	10.27	12.14%	4.14%	-11.36%	-20.23%
ASC	73 Outperform	€701.06M	8.43	9.91%	4.82%	20.11%	―
TRN	72 Outperform	€18.04B	16.31	19.67%	4.41%	10.18%	8.43%
SRG	70 Outperform	€18.28B	13.09	17.62%	5.19%	-8.04%	30.49%
IG	69 Neutral	€9.48B	16.84	―	4.11%	-3.34%	8.88%
SPM	66 Neutral	€4.45B	13.47	13.05%	7.68%	18.52%	29.29%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%