Endesa SA

ELE: XMAD (ESP)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	€32.00	Bkn	Kxmmzzdx

Endesa Posts Improvement in Earnings for Q2; Confirms 2022 Guidance; Shares Undervalued

Tancrede Fulop

Jul 28, 2022

We maintain our EUR 22.30 fair value estimate after no-moat Endesa released a good set of first-half results and confirmed its 2022 guidance. Shares are undervalued because of the company's full exposure to Spanish regulations. The government recently announced a windfall tax on energy companies of around EUR 2 billion annually. Yet, outright power generation is already capped at EUR 65/megawatt-hours and publication of Endesa and Iberdrola earnings show power producers don't generate windfall profits. Consequently, we don't expect the windfall tax to have a significant impact on Endesa and its peers.

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