Endesa Earnings: Hit by Negative Gas Supply Margins, 2023 Guidance Maintained; Shares Undervalued

We retain our EUR 22.30 fair value estimate after no-moat Endesa reported nine-month results hit by a gas supply loss and stated that it will reach the upper end of its 2023 guidance. Shares are undervalued. The firm will hold its annual capital market day on Nov. 23. Current guidance calls for a 2023 dividend of EUR 1 versus EUR 1.59 for 2022. We expect a EUR 1.17 dividend based on a 73% payout and implying a 6.5% yield. Still, there is a chance that Endesa will pay a higher dividend than guided, in line with what it did over the last three years.