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

• Market Cap: €17.46B
• Dividend Yield: 5.58%
• Average Volume (3M): 4.64M
• Price to Earnings (P/E): 12.5
• Beta (1Y): 0.33
• Revenue Growth: -8.04%
• EPS Growth: 30.49%
• Country: IT
• Employees: 3,971
• Sector: Utilities
• Sector Strength: 87
• Industry: Regulated Gas
• EPS (TTM): 0.11
• Shares Outstanding: 3,360,858,000
• 10 Day Avg. Volume: 5,115,100
• 30 Day Avg. Volume: 4,643,516
• 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: €5.40
• Price Target Upside: 3.65% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 6

• Rating: 75 Outperform
• Price Target: ―

SNAM S.p.A. is a stable company with strong profitability and operational efficiency. While it faces challenges with declining revenues and negative free cash flow, its stock is supported by a positive technical outlook and attractive valuation. The high dividend yield further enhances its appeal to income-focused investors.

Positive Factors

Dividend Yield

The stock offers an attractive dividend yield of approximately 6.6%, with limited downside potential.

Energy Transition Support

Gas is considered essential for supporting the energy transition in Italy and Central Europe, which is a positive factor for Snam.

Financial Performance

Snam's revenues and EBITDA are expected to increase due to higher RAB-related revenues and energy transition services.

Negative Factors

Future Revenue Expectations

FY24E revenues should decrease mainly due to much lower revenues from the energy transition.

Interest Costs

The expected higher interest costs partially offset the positive operating performance.

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

Company Description

SNAM S.p.A. (SRG) is a leading Italian energy infrastructure company, primarily focused on the natural gas sector. It operates an extensive network of gas pipelines, storage facilities, and regasification terminals, facilitating the transportation and distribution of natural gas across Italy and beyond. The company plays a critical role in the European energy market, ensuring energy security and sustainability through its services, which include the management of gas transportation, storage, and distribution systems, as well as providing ancillary services to its customers.

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

The company demonstrates strong profitability and operational efficiency, with robust EBIT and EBITDA margins. However, it faces challenges with declining revenues and negative free cash flow. The balance sheet reflects significant leverage, though profitability relative to equity remains strong.

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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.55B	4.29B	3.50B	3.29B	2.75B
Gross Profit	3.12B	2.87B	2.60B	1.78B	1.70B
EBITDA	3.10B	2.42B	2.23B	2.25B	2.16B
Net Income	1.26B	1.14B	671.00M	1.50B	1.10B
Balance Sheet
Total Assets	35.79B	33.52B	32.47B	27.36B	26.13B
Cash, Cash Equivalents and Short-Term Investments	1.81B	1.38B	1.76B	1.34B	3.04B
Total Debt	18.36B	16.65B	13.68B	15.36B	15.94B
Total Liabilities	26.82B	25.93B	24.95B	20.12B	19.66B
Stockholders Equity	8.93B	7.63B	7.47B	7.20B	6.47B
Cash Flow
Free Cash Flow	-1.00B	-1.68B	2.79B	94.00M	431.00M
Operating Cash Flow	1.81B	-135.00M	4.11B	1.34B	1.60B
Investing Cash Flow	-2.68B	-2.23B	-1.36B	-1.64B	-1.64B
Financing Cash Flow	1.29B	1.99B	-2.32B	-1.41B	233.00M

SNAM S.p.A. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5.21
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 5.21 is above the 20-day moving average (MA) of 5.11, above the 50-day MA of 5.08, and above the 200-day MA of 4.58, indicating a bullish trend. The MACD of 0.03 indicates Negative momentum. The RSI at 65.59 is Neutral, neither overbought nor oversold. The STOCH value of 78.58 is Neutral, 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
IG	79 Outperform	€7.49B	13.32	20.21%	5.03%	-3.34%	8.88%
SPM	77 Outperform	€4.50B	13.63	13.05%	7.44%	18.52%	29.29%
SRG	75 Outperform	€17.46B	12.50	17.62%	5.58%	-8.04%	30.49%
ASC	74 Outperform	€659.88M	7.93	9.67%	4.80%	9.09%	98.81%
TRN	72 Outperform	€17.25B	15.59	19.67%	4.61%	10.18%	8.43%
Sector *	72 Outperform	€14.38B	49.27	13.35%	4.69%	0.08%	15.77%
TEN	71 Outperform	€16.58B	9.14	12.40%	4.68%	-12.82%	-21.98%