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1. Company Snapshot

1.a. Company Description

A2A S.p.A. engages in the production, sale, and distribution of gas and electricity, and district heating in Italy and internationally.The company generates electricity through hydroelectric, thermoelectric, photovoltaic, cogeneration, waste treatment, and wind plants with a total installed capacity of 8.9 GW; and purchases and sells electricity, gas, fuels, and environmental certificates.It also engages in the production and sale of heat produced through district heating networks; waste management activities, including collection and street sweeping, treatment, disposal, and recovery of materials and energy; and the construction and management of integrated waste disposal plants and systems.


In addition, the company offers integrated water cycle management services; and technical consultancy services relating to energy efficiency certificates.Further, it is involved in the management of public lighting and traffic regulation systems, votive lamps, street lights, and water purification and sewer activities, as well as offers energy efficiency and electric mobility services.Additionally, the company provides telecommunication services, including management of fixed and mobile phone lines, and data transmission lines; management and development of infrastructures to support communications; and implementation and management of video surveillance and access control systems, as well as designs solutions and applications for creating new models of cities and territories.


A2A S.p.A. is headquartered in Brescia, Italy.

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1.b. Last Insights on A2A

A2A S.p.A.'s recent performance was driven by a 16% revenue increase in Q1 2025, primarily due to strategic expansions and acquisitions. The company's strategic moves, including the acquisition of new assets, have positioned it for growth in the energy market. Additionally, A2A's focus on navigating competitive pressures and decreasing EBITDA suggests a proactive approach to managing operations and improving profitability. Furthermore, the company's revenue growth and strategic expansions are expected to drive future performance. The company has also expanded its presence in the energy market through strategic acquisitions.

1.c. Company Highlights

2. A2A's H1 2025: Resilient Performance Amidst Strategic Execution

A2A reported H1 2025 results, demonstrating execution of its strategic plan. The company's revenues increased 13% to €7 billion, driven by the consolidation of Duereti and higher energy commodity prices. Reported EBITDA was €1.22 billion, down slightly, but up 2% when adjusting for the extraordinary hydroelectric production effect in 2024. Net profit decreased 11% to €434 million, but was up 1% when adjusting for the same effect. EPS came out at €0.08203, significantly lower than estimates of €0.29. The company's financial performance was marked by a solid increase in revenues, but profitability was impacted by various factors.

Publication Date: Aug -07

📋 Highlights
  • Revenue Growth:: H1 2025 revenue rose 13% to €7 billion, driven by Duereti consolidation and higher energy prices.
  • Adjusted EBITDA Resilience:: EBITDA declined slightly but improved 2% to €1.22 billion after adjusting for 2024 hydroelectric anomalies.
  • Strategic Asset Rotation:: Completed grid acquisitions from Enel and sold gas network for €430 million, enhancing portfolio flexibility.
  • 2025 Guidance Confirmation:: Maintained EBITDA target of €2.2 billion and net ordinary income of €700 million amid strong cash conversion (65%).

Operational Highlights and Strategic Moves

The company completed asset rotation in electricity grids, acquiring assets from Enel and integrating them into its portfolio. It also sold part of its gas network to Ascopiave for €430 million. A2A secured a 17-year LNG supply agreement with British Petroleum, ensuring supply and price stability. The company won a 20-year concession in Sesto San Giovanni, a large metropolitan area near Milan. These strategic moves underscore A2A's commitment to optimizing its portfolio and securing long-term agreements.

Financial Position and Guidance

A2A's capital expenditure (CapEx) was €700 million, with 60% focused on development, and €400 million in development CapEx. The company has a strong financial position, with a net financial position to EBITDA ratio of 2.3x, down from 2.5x in 2024. The dividend payment was €313 million, a 4% increase, and an employee stock ownership plan was launched with 86% subscription. A2A confirmed its guidance for 2025, with €2.2 billion of EBITDA and €0.7 billion of net ordinary income.

Valuation and Outlook

Based on the current stock price, A2A trades at a P/E ratio of 8.12, a P/B ratio of 1.18, and an EV/EBITDA multiple of 5.33. The stock offers a dividend yield of 4.67% and a free cash flow yield of 11.25%. With a robust CapEx plan and a focus on energy transition and circular economy, A2A is well-positioned for long-term growth. Analysts estimate next year's revenue growth at -0.6%, implying that the current valuation may offer a compelling entry point.

Challenges and Opportunities

A2A faces challenges related to the hydroelectric concession renewal process and potential market manipulation allegations. However, the company expects minimal impact from these issues. On the other hand, A2A sees significant opportunities in the data center market, particularly in metropolitan areas like Milano and Madrid. The company's strong grid and generation capacity make it well-positioned to provide baseload power.

3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.84%)

6. Segments

Generation and Trading

Expected Growth: 6.9%

A2A S.p.A.'s 6.9% growth in Generation and Trading is driven by increased electricity production from renewable sources, favorable market conditions, and strategic asset optimization. Additionally, effective risk management and hedging strategies have contributed to the segment's growth, along with a strong focus on cost reduction and operational efficiency.

Market

Expected Growth: 4.6%

A2A S.p.A.'s 4.6% growth is driven by increasing demand for renewable energy, expansion in the Italian market, and strategic investments in grid modernization. Additionally, the company's focus on energy efficiency and cost savings initiatives has contributed to its growth. Furthermore, A2A's diversification into new businesses such as waste management and public lighting has also supported its growth momentum.

Eliminations

Expected Growth: 4.83%

A2A S.p.A.'s 4.83% growth is driven by increasing demand for renewable energy, successful integration of acquired assets, and cost savings from operational efficiencies. Additionally, favorable regulatory policies and investments in grid infrastructure have contributed to the growth.

Smart Infrastructures

Expected Growth: 8.95%

A2A S.p.A.'s Smart Infrastructures segment growth of 8.95% is driven by increasing adoption of IoT and AI technologies, rising demand for energy efficiency and grid modernization, and government initiatives promoting sustainable infrastructure development.

Waste

Expected Growth: 4.65%

A2A S.p.A.'s waste management segment growth of 4.65% is driven by increasing waste generation, stringent environmental regulations, and rising adoption of waste-to-energy conversion. Additionally, A2A's strategic acquisitions and investments in sustainable waste management practices have contributed to its growth.

Corporate Segment

Expected Growth: 8.5%

A2A S.p.A.'s Corporate Segment growth of 8.5% is driven by increasing demand for renewable energy, effective cost management, and strategic investments in grid infrastructure. Additionally, the segment benefits from favorable regulatory frameworks, growing electricity distribution volumes, and a strong focus on sustainability and energy efficiency initiatives.

7. Detailed Products

Electricity

A2A S.p.A. generates and distributes electricity to households and businesses across Italy.

Gas

A2A S.p.A. supplies natural gas to customers in Italy, providing a clean and efficient source of energy.

Waste Management

A2A S.p.A. offers waste collection, treatment, and disposal services to municipalities and businesses.

Water Management

A2A S.p.A. provides water supply, treatment, and distribution services to households and industries.

Heat and Cooling

A2A S.p.A. offers district heating and cooling services to urban areas, providing efficient and sustainable thermal energy.

Renewable Energy

A2A S.p.A. develops and operates renewable energy sources, such as wind, solar, and hydroelectric power.

8. A2A S.p.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

A2A S.p.A. operates in a market with moderate threat of substitutes, as customers have some alternatives but they are not very attractive.

Bargaining Power Of Customers

A2A S.p.A. faces high bargaining power of customers, as they are large and have significant purchasing power.

Bargaining Power Of Suppliers

A2A S.p.A. has a low bargaining power of suppliers, as they are numerous and have limited negotiating power.

Threat Of New Entrants

A2A S.p.A. operates in a market with moderate threat of new entrants, as there are some barriers to entry but they are not insurmountable.

Intensity Of Rivalry

A2A S.p.A. operates in a highly competitive market, with many players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.97%
Debt Cost 3.95%
Equity Weight 40.03%
Equity Cost 8.87%
WACC 5.92%
Leverage 149.79%

11. Quality Control: A2A S.p.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

Stock-Card
Iren

A-Score: 6.7/10

Value: 7.1

Growth: 5.6

Quality: 3.4

Yield: 7.5

Momentum: 8.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
ACEA

A-Score: 6.6/10

Value: 5.8

Growth: 5.6

Quality: 4.9

Yield: 8.1

Momentum: 7.0

Volatility: 8.3

1-Year Total Return ->

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A2A

A-Score: 6.6/10

Value: 7.6

Growth: 6.4

Quality: 3.8

Yield: 7.5

Momentum: 5.0

Volatility: 9.0

1-Year Total Return ->

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Hera

A-Score: 6.5/10

Value: 6.8

Growth: 5.7

Quality: 3.9

Yield: 6.9

Momentum: 6.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
EVN

A-Score: 5.9/10

Value: 6.6

Growth: 6.6

Quality: 5.6

Yield: 5.6

Momentum: 2.5

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
EDP

A-Score: 5.9/10

Value: 6.5

Growth: 3.4

Quality: 3.4

Yield: 7.5

Momentum: 6.0

Volatility: 8.3

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

2.28$

Current Price

2.28$

Potential

-0.00%

Expected Cash-Flows