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1. Company Snapshot

1.a. Company Description

Iberdrola, S.A. engages in the generation, transmission, distribution, and supply of electricity in Spain and internationally.It generates and markets electrical power using renewable sources, such as onshore and offshore wind, hydro, solar photovoltaic, combined cycle gas, nuclear, and biomass, as well as through installation of batteries.The company is also involved in the purchase and sale of electricity and gas on wholesale markets; development of green hydrogen projects; and distribution and sale of gas.


It has a total installed capacity of 58,320 MW, including 38,138 MW of renewable installed capacity; and operates 1.2 million kilometers of electricity transmission and distribution lines, as well as serves 36.11 million consumers.In addition, the company offers energy storage, heat pumps, self-consumption, and electric vehicles for residential customers; and management of energy facilities, as well as supplies green H2, industrial heat, etc.to industrial customers.


Iberdrola, S.A. was founded in 1840 and is headquartered in Bilbao, Spain.

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1.b. Last Insights on IBE

Iberdrola's recent performance was driven by a series of positive developments. The company's upgrade to a Zacks Rank #2 (Buy) reflects growing optimism about its earnings prospects. Additionally, Iberdrola's partnership with AWS to leverage AI and optimize energy production has been a significant driver of growth. The company's €5.5 billion profit in 2024, announced in January, further solidified its position in the market. Recent news also highlights Iberdrola's commitment to renewable energy, with the approval of a 315MW offshore wind farm in Germany and a 1,000GWh PPA with Italian retailer Pam Panorama.

1.c. Company Highlights

2. Iberdrola's 9-Month Earnings: Robust Performance Driven by Networks and Renewables

Iberdrola's 9-month net profit reached €5,307 million, a 17% increase in adjusted net profit, driven by robust operating performance with reported EBITDA of €12,438 million, up 26% in Networks business. The company's adjusted net income, excluding capital gains, reached €5,116 million, a 16.6% increase. Earnings per share (EPS) came in at €0.2182, in line with estimates. The strong performance was driven by a 26% growth in Networks' EBITDA to €6,128 million, driven by the UK and US performance. The Energy Production and Customer business EBITDA reached €5.9 billion, with 86% emission-free generation.

Publication Date: Oct -29

📋 Highlights
  • Adjusted Net Profit Growth: 17% increase to €5,307 million, driven by 26% Networks EBITDA surge to €6,128 million.
  • Record Investment: €9 billion invested (12% rise in Networks to €4,904 million), supporting renewable and infrastructure projects.
  • Debt Reduction: Net debt fell €3.2 billion to €48.5 billion, aided by 10% operating cash flow growth to €9,752 million.
  • Shareholder Returns: Interim dividend rose 8.2% to €0.25 per share, reflecting robust profitability.
  • 2025 Guidance: Targeting €6.6 billion+ adjusted net profit, driven by 10% operating cash flow growth and renewables expansion.

Investment and Cash Flow

Investment hit a record €9 billion, with Networks investment increasing 12% to €4,904 million. Operating cash flow rose 10% to €9,752 million, enabling a €3.2 billion reduction in consolidated net debt to €48.5 billion. The company's strong cash generation and disciplined investment approach have contributed to its robust financial performance. As Jose Sanchez Galán noted, the company has a competitive project in the UK, East Anglia ONE North, with secured supply chain and profitability criteria.

Valuation and Credit Metrics

The company's valuation metrics appear reasonable, with a P/E Ratio of 21.91 and an EV/EBITDA ratio of 8.18. The Net Debt / EBITDA ratio stands at 2.63, indicating a manageable debt burden. The company's credit ratios are at a strong level, with an adjusted net debt-to-EBITDA ratio below 3x. The FFO adjusted net debt reached 26.2%, and the adjusted leverage ratio is 43.3%. The Dividend Yield stands at 3.0%, providing a relatively attractive return for investors.

Guidance and Outlook

The company has improved its guidance for 2025, expecting double-digit growth in adjusted net profit to €6.6 billion or more. This growth is driven by a 10% increase in operating cash flow, a 12% increase in Networks investment, and selective growth in renewables. The company has a strong position in Networks, with attractive regulatory frameworks driving tariff increases of 10% in the US and 8% in Brazil. Iberdrola also has a growing pipeline of renewable projects, including 5,500 megawatts under construction and 8,500 megawatts in the pipeline.

3. NewsRoom

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Assessing Iberdrola (BME:IBE): Does Recent Momentum Reflect Its True Valuation?

Nov -26

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Looking at Iberdrola’s Valuation After 32.5% Rally and Offshore Wind Expansion

Nov -25

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Iberdrola submits takeover bid for full ownership of Brazil’s Neoenergia

Nov -25

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Iberdrola Goes All-In: $1.2 Billion Power Grab in Brazil

Nov -24

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Iberdrola to deliver transmission project in Australia

Nov -12

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Shell Walks Away from Scottish Wind Dreams as Costs Soar

Nov -10

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IFF Benicarló Pioneers On-Site Green Hydrogen Production Facility for Sustainable Fragrance Ingredient Manufacturing

Nov -06

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Is Iberdrola’s Recent 31% Rally Supported by Growth in Renewables?

Nov -05

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.45%)

6. Segments

Customers

Expected Growth: 4.3%

Iberdrola's clean energy offerings drive growth, as individuals and businesses increasingly prioritize renewable energy sources, reducing carbon footprint and complying with regulations, further boosted by grid expansion and smart grid investments.

Networks

Expected Growth: 4.5%

Iberdrola's Networks segment is poised for growth, driven by increasing demand for electricity in Spain and the UK, coupled with the company's focus on grid modernization and renewable energy integration.

Renewable Energy and Sustainable Generation

Expected Growth: 5.3%

Iberdrola’s commitment to renewable energy, driven by increasing demand for clean power and government incentives, will propel the segment’s growth. The company’s diversified portfolio of wind and hydroelectric power will ensure a stable revenue stream.

Other Business, Corporation and Adjustments

Expected Growth: 5.2%

Iberdrola's growth is driven by increasing demand for renewable energy, expanding electrification of transportation, and strategic investments in digital infrastructure.

7. Detailed Products

Renewable Energy

Iberdrola generates and supplies renewable energy from wind, solar, hydro and biomass sources, reducing carbon emissions and promoting sustainable development.

Electricity Distribution

Iberdrola distributes electricity to millions of customers through its network of power lines, substations and transformers, ensuring reliable and efficient energy supply.

Gas Distribution

Iberdrola distributes natural gas to customers through its network of pipelines, providing a clean and efficient source of energy.

Energy Storage

Iberdrola offers energy storage solutions to customers, enabling them to store excess energy generated from renewable sources and reduce their energy costs.

Electric Vehicle Charging

Iberdrola provides electric vehicle charging infrastructure and services, enabling customers to charge their vehicles efficiently and sustainably.

Energy Efficiency Solutions

Iberdrola offers energy efficiency solutions to customers, helping them to reduce their energy consumption and carbon emissions.

8. Iberdrola, S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Iberdrola's main business is the generation and distribution of electricity, which is a essential service. However, there are substitutes such as renewable energy sources and energy efficiency measures that can reduce the demand for electricity.

Bargaining Power Of Customers

Iberdrola's customers are mainly households and small businesses, which have limited bargaining power. The company has a diversified customer base, which reduces the dependence on a single customer.

Bargaining Power Of Suppliers

Iberdrola's main suppliers are fuel providers, equipment manufacturers, and construction companies. The company has a diversified supplier base, which reduces the bargaining power of individual suppliers.

Threat Of New Entrants

The electricity generation and distribution industry has high barriers to entry, including significant capital requirements, regulatory hurdles, and technical expertise. This limits the threat of new entrants.

Intensity Of Rivalry

The electricity generation and distribution industry is highly competitive, with several large players competing for market share. Iberdrola faces intense competition from other utilities and renewable energy companies.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 53.02%
Debt Cost 6.79%
Equity Weight 46.98%
Equity Cost 6.79%
WACC 6.79%
Leverage 112.85%

11. Quality Control: Iberdrola, S.A. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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ENGIE

A-Score: 7.2/10

Value: 7.0

Growth: 5.6

Quality: 3.6

Yield: 10.0

Momentum: 7.0

Volatility: 10.0

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Enel

A-Score: 6.6/10

Value: 5.4

Growth: 5.1

Quality: 4.8

Yield: 8.1

Momentum: 6.5

Volatility: 10.0

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E.ON

A-Score: 6.6/10

Value: 7.3

Growth: 4.8

Quality: 3.2

Yield: 6.9

Momentum: 8.0

Volatility: 9.3

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RWE

A-Score: 6.6/10

Value: 8.1

Growth: 5.4

Quality: 3.8

Yield: 5.0

Momentum: 8.0

Volatility: 9.0

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Iberdrola

A-Score: 6.2/10

Value: 3.7

Growth: 5.4

Quality: 4.6

Yield: 6.2

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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SSE

A-Score: 5.8/10

Value: 5.9

Growth: 4.9

Quality: 4.5

Yield: 6.9

Momentum: 3.5

Volatility: 9.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

17.97$

Current Price

17.97$

Potential

-0.00%

Expected Cash-Flows