Enel posts profit growth but market uncertainty weighs on outlook

Investing.com -- Enel (BIT:ENEI) on Friday posted its full-year 2024 financial results, which showed a year-on-year increase in net profit and EBITDA but also a slight rise in net debt beyond company targets.

The Italian energy group reported an ordinary net profit of €7.14 billion for 2024, marking a 9.6% increase from the previous year. 

This figure exceeded company-compiled consensus estimates by 3%, with Barclays (LON:BARC) and Morgan Stanley (NYSE:MS) attributing the beat to lower financing costs and minority expenses. 

Adjusted EBITDA came in at €22.8 billion, aligning with the upper end of Enel’s guidance range but offering no meaningful upside.

The North American division saw a significant 73% year-on-year increase in EBITDA, reaching €1.16 billion and surpassing forecasts. 

In contrast, Italy’s EBITDA of €11.24 billion fell short of expectations due to lower thermal production and trading activity, partially offset by strong hydro output. 

Latin America slightly outperformed, delivering €4.89 billion in EBITDA, a 2% increase over projections.

Enel’s net debt stood at €55.77 billion at the end of 2024, slightly above the company’s target of €54.7 billion. Analysts noted that the higher-than-expected debt was largely anticipated due to acquisitions and other financial commitments.

The company reaffirmed its 2025 guidance, maintaining a net profit target of €6.7 billion to €6.9 billion and EBITDA projections between €22.9 billion and €23.1 billion. 

Analysts suggested these targets remain feasible, citing stable production levels, an estimated €800 million contribution from network operations, and growth prospects in Latin America. Enel’s Spanish subsidiary, Endesa (BME:ELE), is expected to see EBITDA growth of 5-6% in 2025.

Morgan Stanley pointed to uncertainty over Enel’s capital allocation strategy, particularly regarding a potential buyback program. 

The CEO’s mention of a 500-million-share repurchase created speculation, though analysts believe it was a renewal of prior authorization rather than an imminent shift. 

They highlighted that if Enel does not secure an extension for Italian electricity distribution concessions, it may prioritize shareholder returns over network investments.

Stock valuation remains a key focus. Enel trades at a 9.9x estimated 2025 price-to-earnings ratio, a 16% discount to European utility peers. 

Barclays and Morgan Stanley described this as "undemanding," but noted that future upside depends on regulatory clarity and capital allocation decisions. The company set its dividend per share at €0.47, 2% above consensus estimates.