Before the quarterly results were released, I had already written that, for me, $IBE (-1,61 %) revenue and EPS are less important to me than the company’s operational performance. Nevertheless, let’s first take a look at the hard facts:
- EPS (expected): 0.23 EUR
- EPS (reported): 0.25 EUR
- Revenue (expected): 10.57 billion EUR
- Revenue (reported): 10.45 billion EUR
At first glance, the results appear mixed. For me, however, this reaffirms that, for a capital-intensive utility, revenue and EPS tell only part of the investment story.
Before the earnings release, I had written that I would be paying particular attention to operating cash flow, EBITDA, the performance of the grid business, capital expenditures (CAPEX), and management’s outlook. This is exactly where $IBE (-1,61 %) convincing from my perspective. Adjusted EBITDA rose again; the group continues to invest billions in expanding its power grids and renewable energy, while also confirming its full-year forecast. The regulated grid business, in particular, is increasingly becoming the company’s most important value driver and ensures stable and predictable cash flows. That’s exactly what I look for in a quality utility.
I also found the announced acquisition of the Finnish grid operator Caruna exciting. Strategically, I consider this move to be very sensible. $IBE (-1,61 %) It thereby specifically strengthens its regulated grid business and increases the share of predictable revenues. In the short term, the acquisition does mean higher capital requirements, but in the long term, it should further support the company’s growth trajectory.
At the same time, it is reported that $IBE (-1,61 %) is also among the parties interested in parts of Enel’s Brazilian business. Should this actually result in a transaction, it would further strengthen the company’s position in one of the group’s most important growth markets. This is still speculation, but it shows that management is consistently seeking attractive investment opportunities.
I also find the decision to suspend the planned sale of a Spanish solar portfolio for the time being to be interesting. To me, this is a positive signal. Clearly, management is not willing to sell high-quality assets below their value. If the market valuation does not meet the company’s own expectations, it makes more sense to continue operating the facilities itself and capture the resulting cash flows. To me, this speaks to disciplined capital allocation.
Another point I had raised beforehand was the return of capital. There were no surprises here. $IBE (-1,61 %) The company is sticking to its reliable dividend policy and continues to finance its high investments through strong operating performance. It is precisely this balance between growth, balance sheet quality, and dividends that makes the company so interesting to me.
The quarterly results have confirmed rather than refuted my positive impression. The slight miss on EPS is of secondary importance to me. What’s much more important is that $IBE (-1,61 %) the company is continuing on its long-term growth path, consistently investing in regulated infrastructure, and at the same time acting with discipline in its capital allocation. In my view, developments surrounding Caruna, a potential Enel transaction, and the suspended solar portfolio demonstrate that management thinks long-term and prioritizes sustainable value creation.
$IBE (-1,61 %) remains on my watchlist. Today’s figures have actually made the company more attractive to me. As a dividend investor, I particularly like the combination of predictable cash flows, continuous investments, and a long-term shareholder-friendly dividend policy. Whether $IBE (-1,61 %) it finds its way into my portfolio will now primarily be a matter of valuation and finding an attractive entry point.
~ Not investment advice ~
