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

• Market Cap: €17.28B
• Dividend Yield: 5.62%
• Average Volume (3M): 4.58M
• Price to Earnings (P/E): 12.4
• Beta (1Y): 0.32
• Revenue Growth: -8.04%
• EPS Growth: 30.49%
• Country: IT
• Employees: 3,971
• Sector: Utilities
• Sector Strength: 62
• Industry: Regulated Gas
• EPS (TTM): 0.11
• Shares Outstanding: 3,360,858,000
• 10 Day Avg. Volume: 4,669,724
• 30 Day Avg. Volume: 4,578,650
• 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: €5.46
• Price Target Upside: 5.61% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 7

• 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 company's share offers limited downside potential with an approximate 6.1% dividend yield.

Earnings Growth

Net income is expected to increase by 15% year-over-year, thanks to higher EBITDA and contribution from equity associates.

Energy Transition

Snam has opportunities in Germany after acquiring a stake in Open Grid Europe, with a focus on green hydrogen and CO2 storage.

Negative Factors

Interest Costs

The expected higher interest costs and lower contribution from equity associates partially offset the positive operating performance.

Revenue Decrease

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

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

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: Neutral
• Last Price: 5.17
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IT:SRG, the sentiment is Neutral. The current price of 5.17 is below the 20-day moving average (MA) of 5.18, above the 50-day MA of 5.11, and above the 200-day MA of 4.65, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 42.53 is Neutral, neither overbought nor oversold. The STOCH value of 11.95 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
SRG	75 Outperform	€17.28B	12.37	17.62%	5.62%	-8.04%	30.49%
Sector *	66 Neutral	$17.25B	17.99	5.54%	3.64%	6.63%	11.55%
0DME	―	€666.38M	8.08	9.67%	―	―	―
0HXB	―	€16.55B	9.12	12.40%	―	―	―
0LBM	―	€17.04B	15.41	19.67%	―	―	―
I10	―	€7.75B	13.63	20.21%	―	―	―
SPEA	―	€4.64B	14.08	13.05%	―	―	―