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SNAM S.p.A. (IT:SRG)
:SRG

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

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IT

SNAM S.p.A.

(LSE:SRG)

Rating:75Outperform
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
Energy Transition
Gas is considered essential for supporting the energy transition in Italy and Central Europe, positively impacting Snam.
Revenue and EBITDA
Snam's revenues and EBITDA are expected to increase due to higher RAB-related revenues and energy transition services.
Negative Factors
Future Revenues
FY24E revenues should decrease mainly due to much lower revenues from the energy transition.
Interest Costs and Equity Associates
Expected higher interest costs and lower contribution from equity associates partially offset the positive operating performance.

SNAM S.p.A. (SRG) vs. iShares MSCI Italy ETF (EWI)

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

Company DescriptionSnam 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 MoneySNAM S.p.A. generates revenue primarily through its extensive network of natural gas transportation and storage services. The company earns money by charging fees for the transportation of natural gas through its pipelines and for the storage of gas in its facilities. Additionally, SNAM operates regasification terminals that convert liquefied natural gas (LNG) back into a gaseous state for distribution, providing another revenue stream. The company's earnings are further supported by long-term contracts with energy providers and partnerships with other infrastructure operators, ensuring stable and predictable cash flows. SNAM's strategic investments in renewable energy projects and innovative technologies also contribute to its revenue, aligning with its goals for sustainable growth and energy transition.

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
78
Positive
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
72
Positive
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
65
Positive
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue3.55B4.29B3.50B3.29B2.75B
Gross Profit3.12B2.87B2.60B1.78B1.70B
EBITDA3.10B2.42B2.23B2.25B2.16B
Net Income1.26B1.14B671.00M1.50B1.10B
Balance Sheet
Total Assets35.79B33.52B32.47B27.36B26.13B
Cash, Cash Equivalents and Short-Term Investments1.81B1.38B1.76B1.34B3.04B
Total Debt18.36B16.65B13.68B15.36B15.94B
Total Liabilities27.90B25.93B24.95B20.12B19.66B
Stockholders Equity7.93B7.63B7.47B7.20B6.47B
Cash Flow
Free Cash Flow-1.00B-1.68B2.79B94.00M431.00M
Operating Cash Flow1.81B-135.00M4.11B1.34B1.60B
Investing Cash Flow-2.68B-2.23B-1.36B-1.64B-1.64B
Financing Cash Flow1.29B1.99B-2.32B-1.41B233.00M

SNAM S.p.A. Technical Analysis

Technical Analysis Sentiment
Positive
Last Price5.06
Price Trends
50DMA
5.01
Positive
100DMA
4.75
Positive
200DMA
4.46
Positive
Market Momentum
MACD
0.02
Positive
RSI
50.95
Neutral
STOCH
17.14
Positive
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 5.06 is below the 20-day moving average (MA) of 5.08, above the 50-day MA of 5.01, and above the 200-day MA of 4.46, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 50.95 is Neutral, neither overbought nor oversold. The STOCH value of 17.14 is Positive, 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

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
ITSRG
75
Outperform
€16.95B13.4616.18%6.88%-16.40%10.90%
60
Neutral
£7.96B-2.82-8.53%7.13%-3.48%-99.82%
€652.30M16.934.51%4.98%
€17.37B10.6010.53%5.87%
€17.28B16.2319.05%6.44%
DEI10
€7.15B12.6920.21%5.41%
€4.70B15.2512.44%7.13%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
IT:SRG
SNAM S.p.A.
5.06
1.12
28.43%
GB:0DME
Ascopiave S.p.A.
3.02
0.77
34.22%
GB:0HXB
Tenaris
16.20
2.73
20.27%
GB:0LBM
Terna S.p.A.
8.53
1.59
22.91%
DE:I10
Italgas S.p.A.
7.04
2.91
70.46%
DE:SPEA
Saipem SpA
2.37
0.26
12.32%
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 20, 2025