Terna (TEZNY) AI Stock Analysis

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Terna

(OTC:TEZNY)

Rating:73Outperform

Price Target:

$32.00

▲(4.64%Upside)

Terna demonstrates strong financial health with solid profitability and efficient operations. The strategic focus on energy transition and infrastructure investment enhances the outlook. However, high leverage and challenges in cash flow management pose risks. Technical analysis shows stable momentum, but valuation is moderate, offering limited upside potential. Overall, Terna presents a balanced investment with strengths in income growth and strategic execution, tempered by leverage concerns.

Terna (TEZNY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$20.44B

Dividend Yield1.48%

Average Volume (3M)715.00

Price to Earnings (P/E)17.8

Beta (1Y)0.19

Revenue Growth15.86%

EPS Growth19.97%

CountryUS

Employees6,376

SectorUtilities

Sector Strength78

IndustryRegulated Electric

Share Statistics

EPS (TTM)N/A

Shares Outstanding669,997,300

10 Day Avg. Volume0

30 Day Avg. Volume715

Financial Highlights & Ratios

PEG Ratio0.63

Price to Book (P/B)0.89

Price to Sales (P/S)0.00

P/FCF Ratio7.43

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Terna Business Overview & Revenue Model

Company DescriptionTerna S.p.A. (TEZNY) is an Italian electricity transmission system operator that plays a central role in ensuring the efficient functioning of the national electricity system. As a key player in the energy sector, Terna is responsible for the transmission and dispatching of electricity across Italy. The company operates and maintains a high-voltage power grid that spans the country, facilitating the reliable supply of electricity from producers to consumers. Terna is committed to innovation and sustainability, integrating renewable energy sources and enhancing grid infrastructure to support the evolving energy landscape.

How the Company Makes MoneyTerna generates revenue primarily through the operation and maintenance of its electricity transmission network. The company earns income from tariffs charged for the use of its high-voltage infrastructure, which is regulated by the Italian Regulatory Authority for Energy, Networks, and Environment (ARERA). These tariffs are structured to cover the costs associated with network maintenance, development, and operation, as well as to provide a return on invested capital. Additionally, Terna engages in international projects and partnerships aimed at expanding its capabilities and enhancing cross-border electricity exchanges. The company's focus on innovation and grid modernization helps to accommodate increasing amounts of renewable energy, further reinforcing its revenue streams and strategic position in the energy sector.

Terna Earnings Call Summary

Earnings Call Date:May 15, 2025

(Q1-2025)

% Change Since: 7.00%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

The earnings call revealed a strong focus on investment in energy transition and infrastructure development, with significant financial and operational achievements. However, there were challenges with increased operating costs and a decline in renewable energy share. Overall, the highlights outweigh the lowlights, indicating a positive outlook.

Q1-2025 Updates

Positive Updates

Increased Investment in Energy Transition

Terna updated its industrial plan for 2024-'28, outlining investments totaling EUR17.7 billion, an increase of EUR1.2 billion compared to the previous plan, to drive Italy toward decarbonization and reduce dependency on foreign energy supplies.

Record Regulated Investment

Terna plans to invest EUR16.6 billion in the five-year period to develop and modernize the national electricity transmission grid, marking a historical record level of regulated investment.

Completion of Significant Infrastructure Project

Completion of the first submarine cable of the eastern section of the Tyrrhenian Link, connecting Campania and Sicily, marking progress in major power infrastructure projects.

Strong Financial Performance

Group revenues and EBITDA increased by 5% and 4% respectively, with group net income rising by 3% to EUR275 million.

Robust CapEx Growth

Group CapEx reached EUR562 million, recording a 16% growth versus the first quarter of last year.

Increased Solar Production

Solar production grew to around 7 TWh, up 14% compared to the first quarter of last year.

Improved Credit Rating

Standard & Poor’s upgraded the long-term rating of Terna from BBB+ to single A minus.

Successful Green Bond Issue

Terna issued a EUR750 million green bond to finance projects with environmental benefits.

Negative Updates

Decline in Renewable Energy Share

Renewable sources covered about 33% of national demand, three percentage points lower than last year, due to a decrease in wind and hydroelectric production.

Increased Operating Costs

Total operating costs stood at EUR250 million, 8.5% higher than last year, mainly due to higher raw material costs and service costs in non-regulated activities.

Increased Financial Expenses

Net financial expenses increased slightly to EUR39 million, due to new loans at higher interest rates.

Higher Tax Rate

Taxes stood at EUR119 million, EUR7 million higher versus last year, with a tax rate increase from 29.2% to 30.1%.

Company Guidance

During Terna's first quarter 2025 call, the company outlined several key metrics and strategic directions. Terna plans to invest EUR17.7 billion in its 2024-2028 industrial plan, an increase of EUR1.2 billion from the previous plan, emphasizing its role in Italy's energy transition. In the first quarter, Terna authorized 12 projects worth EUR240 million and completed part of the Tyrrhenian Link project. Financially, group revenues and EBITDA rose by 5% and 4% respectively, with a net income increase of 3% to EUR275 million. The company also reported a CapEx of EUR562 million, a 16% growth from last year. Despite these investments, net debt was slightly reduced to EUR11.1 billion. The company issued a EUR750 million green bond and secured an ESG-linked revolving credit facility of EUR1.8 billion, reflecting its commitment to sustainability. Additionally, Terna's credit rating was upgraded by Standard & Poor's to A- with a stable outlook, and it maintained a strong fixed-to-floating debt ratio of 88%.

Terna Financial Statement Overview

Summary

Terna shows strong profitability with robust growth in revenue and efficient operations as reflected in its income statement. However, the balance sheet reveals high leverage, and cash flow analysis indicates challenges with free cash flow, despite strong operational cash generation. Overall, financial performance is solid but requires careful management of leverage and cash flow.

Income Statement

Very Positive

Terna demonstrates strong profitability with a consistent increase in revenue over the years. The gross profit margin for 2024 is high, reflecting efficient cost management. The net profit margin has also improved, indicating healthy bottom-line growth. EBIT and EBITDA margins are strong, showcasing operational efficiency. Overall, the income statement reflects robust financial health and growth trajectory.

Balance Sheet

Positive

Terna's balance sheet is characterized by a high debt-to-equity ratio, reflecting significant leverage, which could pose risks in adverse market conditions. However, the company maintains a reasonable equity ratio, indicating a stable financial foundation. The return on equity is impressive, demonstrating effective use of equity to generate profits. Overall, while leverage is a concern, the company's equity position remains solid.

Cash Flow

Positive

The cash flow statement reveals challenges with free cash flow, which is negative, indicating high capital expenditures. However, operating cash flow is strong relative to net income, showing effective cash generation from operations. The free cash flow to net income ratio is unfavorable, suggesting potential issues with liquidity and reinvestment capabilities. Overall, Terna's cash flow health is mixed, with strengths in operational cash generation but weaknesses in free cash flow.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.68B	3.15B	2.92B	2.57B	2.40B
	Gross Profit
3.02B	2.58B	2.42B	2.16B	2.06B
	EBIT
1.68B	1.36B	1.33B	1.20B	1.18B
	EBITDA
2.57B	2.11B	2.04B	1.83B	1.73B
	Net Income Common Stockholders
1.06B	885.40M	857.00M	789.40M	785.50M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.76B	1.74B	2.41B	2.55B	3.31B
	Total Assets
27.19B	23.47B	22.83B	22.39B	20.70B
	Total Debt
13.86B	12.98B	11.76B	12.42B	12.25B
	Net Debt
11.55B	11.61B	9.60B	10.86B	9.56B
	Total Liabilities
19.64B	17.10B	17.58B	17.60B	16.28B
	Stockholders Equity
7.52B	6.32B	5.15B	4.68B	4.37B
Cash Flow		Free Cash Flow
-1.16B	-963.90M	831.40M	-511.90M	-245.20M
	Operating Cash Flow
1.47B	1.08B	2.32B	832.30M	941.40M
	Investing Cash Flow
-2.40B	-2.33B	-1.86B	-863.30M	-1.39B
	Financing Cash Flow
1.87B	464.30M	92.50M	-1.05B	2.08B

Terna Technical Analysis

Technical Analysis Sentiment

Positive

Last Price30.58

Price Trends

50DMA

29.58

Positive

100DMA

27.53

Positive

200DMA

26.37

Positive

Market Momentum

MACD

0.36

Positive

RSI

56.60

Neutral

STOCH

39.39

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TEZNY, the sentiment is Positive. The current price of 30.58 is below the 20-day moving average (MA) of 30.61, above the 50-day MA of 29.58, and above the 200-day MA of 26.37, indicating a neutral trend. The MACD of 0.36 indicates Positive momentum. The RSI at 56.60 is Neutral, neither overbought nor oversold. The STOCH value of 39.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TEZNY.

Terna Peers Comparison

Overall Rating

UnderperformOutperform

Sector (67)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EBR	78 Outperform	$16.92B	9.26	8.58%	7.70%	0.18%	99.46%
NGG	75 Outperform	$69.19B	18.02	8.31%	5.80%	-6.02%	7.24%
TEZNY	73 Outperform	$20.44B	17.80	19.28%	1.48%	15.86%	19.97%
EBR.B	73 Outperform	$16.87B	10.65	8.58%	0.94%	0.18%	99.46%
FE	72 Outperform	$23.03B	21.23	8.69%	4.46%	7.92%	1.54%
PPL	71 Outperform	$24.96B	25.21	7.00%	3.23%	5.62%	30.02%
Sector *	67 Neutral	$16.04B	16.83	4.58%	3.61%	4.77%	6.10%

* Utilities Sector Average

Performance Comparison

TEZNY

Terna

30.58

7.36

31.70%

EBR.B

Centrais Elc Braz Pfb B Elbras

8.30

1.44

20.99%

FirstEnergy

39.91

2.97

8.04%

NGG

National Grid Transco

70.86

15.93

29.00%

PPL

33.77

6.48

23.74%

EBR

Centrais Eletricas Brasileiras SA - Eletrobras

7.22

0.96

15.34%

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.