Published Mon, 29 Jun 2020 08:05:05 -0400 on Seeking Alpha
Seeking AlphaDividend Ideas | Utilities | SpainEndesa Offers Expanded Dividend Yield Due To Markets Eschewing NuclearJun. 29, 2020 8:05 AM ET|| About: Endesa, S.A. (ELEZF), ELEZYby: Bocconi's Valkyrie Trading SocietyBocconi's Valkyrie Trading Society Value, growth at reasonable price, long onlySummaryEndesa is a utilities company with substantial renewable capacity.
However, with substantial nuclear exposure as well, it's been eschewed by markets, not taking part in the overall renewables boom.
Using comps for disclosed transactions of renewable assets, as well as EDF's nuclear provisions, we conclude that the company is undervalued by markets.
This compressed value means a large dividend yield bolstered by a resilient utilities business, perfect as an all-weather exposure.
By Felipe Bijit
Utilities continue to be a supremely interesting sector. It offers opportunities in diverse exposures across power technologies and geographies, all providing similar resilience to impacts that would result from another set of coronavirus-related lockdowns. This resilience can be a consequence of consumer offsets to reduced commercial activity, with stay-at-home orders shifting power consumption to homes, or it can come from guaranteed remuneration schemes from governments in regulated utilities.
Benefiting from both of these resilience vectors, we have Enel (OTCPK: ENLAY), which on top of low operating volatility provides ample value for investors interested in global exposures. We had an inkling of this undervaluation from the fact that meaningful market actors like Norges Bank seem to unfairly think that Enel does not meet requirements of ESG mandates, putting it in the same box as Glencore (OTCPK: GLCNF), even though Enel is rapidly phasing out coal as ordered by many European governments. Since we know that ESG commands a premium, we looked into the complex network of Enel subsidiaries starting with Endesa (OTCPK: ELEZF), a significant company in... Read more