Snam S.p.A. (SRG.MI) | Investment Case

1. Company Snapshot

1.a. Company Description

Snam S.p.A., together with its subsidiaries, engages in the operation of natural gas transport and storage infrastructure in Italy.The company operates through Natural Gas Transportation, Liquefied Natural Gas (LNG) Regasification, and Natural Gas Storage segments.It provides natural gas transportation and dispatching services with approximately 32,700 kilometers of high-and medium-pressure gas pipelines; and owns and manages LNG regasification plants.

The company also offers natural gas storage services through an integrated group of infrastructure comprising deposits, wells, gas treatment and compression plants, and the operational dispatching systems; and operates nine storage concessions, including five in Lombardy, three in Emilia-Romagna, and one in Abruzzo.In addition, it engages in the lease and maintenance of fibre optic telecommunications cables, as well as provides integrated services in the natural gas mobility sector; energy efficiency solutions for residential, industrial, tertiary, and public administration sectors; and management of biogas and biomethane plants.Further, the company offers engineering and project management services; and supervision of infrastructure planning activities.

It also operates in Albania, Saudi Arabia, Austria, China, Egypt, the United Arab Emirates, France, Greece, the United Kingdom, and the United States.The company was formerly known as Snam Rete Gas S.p.A. and changed its name to Snam S.p.A. in January 2012.Snam S.p.A. was founded in 1941 and is headquartered in San Donato Milanese, Italy.

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1.b. Last Insights on SRG

Snam S.p.A.'s recent performance was negatively impacted by the company's decision to suspend its share buyback program due to market volatility. However, the company's Q3 2024 earnings call highlighted a 12% increase in adjusted EBITDA, driven by strong performance in its energy transition projects. This strategic investment in energy transition projects is expected to drive future growth, but the suspension of the share buyback program may have weighed on investor sentiment.

1.c. Company Highlights

Last Price	5.69
Change Percentage	0.04%
Open	5.65
Previous Close	5.69
Market Cap ( Millions)	19080
Volume	4105598
Year High	5.8
Year Low	4.2
M A 50	5.42
M A 200	5.11

FCF Yield	-4.15%
Dividend Yield	5.11%
ROE	10.98%
Debt / Equity	218.72%
Net Debt / EBIDTA	775.53%
Price To Book	2.09
Price Earnings Ratio	19.23
Price To FCF	-24.12
Price To sales	10.49
EV / EBITDA	15.9

2. Snam's 9M 2025 Earnings: Solid Performance Amidst Energy Transition

Snam's financial performance in the first 9 months of 2025 was robust, driven by growth in regulatory revenues. Adjusted EBITDA reached EUR 2.227 billion, a 6.6% increase year-on-year, while adjusted net income rose to EUR 1.096 billion, representing a 10% increase. Earnings per share (EPS) came in at EUR 0.1094, beating analyst estimates of EUR 0.09706. The company's investment level remained steady at EUR 1.767 billion, and net debt stood at EUR 17.4 billion, down 1% from the first half of 2025.

Publication Date: Nov -08

                                    📋 Highlights
                                    Gas Demand Growth:
                                                Italy's gas demand reached 44 billion cubic meters, a 2% increase YoY, driven by colder weather in residential/commercial sectors.
LNG Supply Surge:
                                                LNG imports rose by 4.2 billion cubic meters (+38% YoY), accounting for over 30% of total gas imports, enhancing supply diversification.
Adjusted EBITDA Growth:
                                                EBITDA hit EUR 2.227 billion (+6.6% YoY), fueled by EUR 119 million higher regulatory revenues and EUR 122 million from transport/storage.
Net Income Expansion:
                                                Adjusted net income climbed to EUR 1.096 billion (+10% YoY), supported by EUR 57 million higher associate contributions and EBITDA growth.
Energy Transition Investments:
                                                EUR 24 million granted for hydrogen backbone feasibility, 72 MW from biomethane plants, and EUR 500 million allocated for CCS in the business plan.

                                

Revenue Growth Drivers

The growth in revenues was primarily driven by regulatory revenues, which increased by around EUR 119 million. Transport and storage revenue also rose by EUR 122 million, linked to the execution of the investment plan. As Luca Passa, Snam's Chief Financial Officer, noted, "We've delivered sound 9-month results despite persisting volatility." The company's guidance for full-year EBITDA has been upgraded to EUR 2.950 billion, reflecting the positive impact of the 2024 deflator update and the switch to the Italian IPCA index for RAB revaluation starting in 2025.

Energy Transition Progress

Snam is making significant progress on its energy transition platform. The first phase of the CCS project in Ravenna has delivered solid technical results, and biomethane plants are already generating 72 megawatts. The company has also been awarded a EUR 24 million contribution by the Connect European Facility to cover half of the feasibility studies for its H2 backbone. With EUR 500 million of CapEx included in the business plan for CCS, Snam is poised to capitalize on the growing demand for clean energy.

Valuation and Dividend

With a P/E Ratio of 18.94 and an EV/EBITDA ratio of 15.78, Snam's valuation appears reasonable. The company's dividend yield stands at 5.19%, making it an attractive option for income investors. The Board of Directors has approved an interim dividend for 2025 of EUR 0.1208 per share, representing a 4% increase compared to the previous year. Snam's net debt to EBITDA ratio is 7.76, indicating a manageable level of leverage.

Outlook and Risks

Analysts estimate Snam's revenues to grow by 6.3% next year. The company's guidance for associate contribution in 2025 is EUR 365 million, excluding OGE. While Snam is making progress on its energy transition strategy, there are risks associated with the ongoing consultation on the dCarbonX project in the UK. Nonetheless, Snam's solid financial performance and progress on energy transition initiatives position the company for long-term success.

3. NewsRoom

Snam SpA (SNMRF) Q3 2025 Earnings Call Highlights: Strategic Growth Amid Regulatory Challenges

Nov -06

Source:

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Sep -22

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.80%)

6. Segments

Transportation

Expected Growth: 3.5%

Snam S.p.A.'s 3.5% growth in Transportation is driven by increasing demand for natural gas, expansion of pipeline infrastructure, and strategic investments in digitalization and sustainability. Additionally, the company's focus on reducing emissions and increasing energy efficiency contributes to its growth in the transportation segment.

Energy Transition

Expected Growth: 5.0%

Snam's 5.0% energy transition growth driven by increasing demand for renewable gas, expansion of biomethane infrastructure, and strategic partnerships for hydrogen development. Additionally, the Italian government's commitment to the European Green Deal and rising carbon prices support the growth of low-carbon energy sources, further boosting Snam's transition efforts.

Storage

Expected Growth: 3.0%

Snam S.p.A.'s 3.0% storage growth driven by increasing demand for natural gas, expansion of renewable energy sources, and government incentives for energy storage infrastructure development. Additionally, growing focus on energy security and decarbonization efforts contribute to the growth.

Regasification

Expected Growth: 2.5%

Snam S.p.A.'s regasification growth driven by increasing LNG demand, Italy's energy transition, and strategic infrastructure investments. Rising gas consumption in power generation and industrial sectors, coupled with declining domestic production, fuels growth. Additionally, Snam's expansion into new markets and optimization of existing terminals support the 2.5% growth rate.

Other Segments

Expected Growth: 3.2%

Snam S.p.A.'s 3.2% growth in Other Segments is driven by increasing demand for sustainable energy solutions, expansion of biomethane production, and growth in renewable energy certificates. Additionally, investments in energy efficiency and grid modernization contribute to the segment's growth.

7. Detailed Products

Natural Gas Transportation

Snam S.p.A. provides natural gas transportation services through its pipeline network, allowing for the transportation of natural gas from production sites to consumption areas.

Natural Gas Storage

Snam S.p.A. offers natural gas storage services, providing a buffer against fluctuations in demand and supply, ensuring a stable gas supply to the market.

LNG Regasification

Snam S.p.A. provides liquefied natural gas (LNG) regasification services, converting LNG back into natural gas for injection into the transportation network.

Biogas Injection

Snam S.p.A. offers biogas injection services, allowing biomethane producers to inject their gas into the transportation network.

Compressor Stations Management

Snam S.p.A. manages compressor stations, ensuring the efficient transportation of natural gas through its pipeline network.

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

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Snam S.p.A. is medium due to the availability of alternative energy sources such as renewable energy and energy storage solutions.

Bargaining Power Of Customers

The bargaining power of customers for Snam S.p.A. is low due to the company's dominant position in the Italian gas market and the lack of alternative suppliers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Snam S.p.A. is medium due to the company's dependence on a few large suppliers of natural gas and the potential for price fluctuations.

Threat Of New Entrants

The threat of new entrants for Snam S.p.A. is low due to the high barriers to entry in the gas transmission and distribution market, including the need for significant investment in infrastructure and the requirement for regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry for Snam S.p.A. is high due to the competitive nature of the energy market and the presence of several large players in the Italian gas market.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	68.52%
Debt Cost	3.95%
Equity Weight	31.48%
Equity Cost	6.72%
WACC	4.82%
Leverage	217.64%

11. Quality Control: Snam S.p.A. passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Italgas

A-Score: 6.7/10

Value: 4.6

Growth: 3.9

Quality: 4.9

Yield: 8.1

Momentum: 9.0

Volatility: 9.7

1-Year Total Return ->

AltaGas

A-Score: 6.7/10

Value: 4.7

Growth: 6.1

Quality: 3.6

Yield: 7.0

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

Snam

A-Score: 6.5/10

Value: 4.2

Growth: 3.7

Quality: 5.2

Yield: 8.8

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

Centrica

A-Score: 5.9/10

Value: 6.5

Growth: 5.6

Quality: 3.5

Yield: 3.1

Momentum: 9.0

Volatility: 8.0

1-Year Total Return ->

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 ->

Enagás

A-Score: 5.8/10

Value: 4.7

Growth: 1.0

Quality: 5.2

Yield: 10.0

Momentum: 4.0

Volatility: 10.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

23.90%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

4.82%

Snam S.p.A. - IT0003153415

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on SRG

1.c. Company Highlights

Less Volatile

Higher Yield

Average Growth

Revenues Beats

Earnings Miss

Earnings Beats

Stable Momentum

Revenues Miss

Average Quality

Fairly Valued

Expensive

2. Snam's 9M 2025 Earnings: Solid Performance Amidst Energy Transition

Revenue Growth Drivers

Energy Transition Progress

Valuation and Dividend

Outlook and Risks

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.80%)

6. Segments

Transportation

Expected Growth: 3.5%

Energy Transition

Expected Growth: 5.0%

Storage

Expected Growth: 3.0%

Regasification

Expected Growth: 2.5%

Other Segments

Expected Growth: 3.2%

7. Detailed Products

Natural Gas Transportation

Natural Gas Storage

LNG Regasification

Biogas Injection

Compressor Stations Management

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

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Snam S.p.A. passed 3 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

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

5.69$

Current Price

5.69$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA