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Investing in Enel Stocks with ETFs: A Smart Strategy for Financial Growth

Enel Announces Significant Stake Sale in Peru

Enel has recently announced a significant divestment of its stakes in power generation companies in Peru, a move that will have a notably positive impact on the overall balance sheet of the Italian energy giant.

Financial Impact of the Sale

The company has finalized the sale of its shares in Enel Generación Perú and Compañía Energética Veracruz to Niagara Energy, with a total transaction value reaching $1.3 billion, equivalent to approximately €1.2 billion.
The total enterprise value of the assets sold has been estimated at around $2.1 billion, or roughly €2 billion, making this divestment a key step in Enel’s rationalization of activities in Latin America.
The agreement, initially announced in November 2023, is now completed, allowing the group to focus on more strategic market segments and contributing to a significant reduction in net debt.

Operation Details

The divestment of assets in Peru is expected to significantly reduce Enel’s debt.
The sale generates a €1.2 billion decrease in the group’s net debt for 2024, in addition to the €400 million already recorded in 2023.
This outcome substantially strengthens the company’s financial position, with a pro forma debt of approximately €54 billion, in line with the targets set for 2024.

From a strategic perspective, the sale allows Enel to optimize its asset portfolio, focusing on geographies and business segments deemed more profitable and consistent with the company’s development plan.

Analysts’ Evaluation

Analysts, including Intesa Sanpaolo, have highlighted the positive nature of this operation, given Enel’s solid quarterly results and clear visibility on the group’s net debt reduction.
The bank maintains a “buy” rating on the stock with a target price of €7.8 per share.

The market has responded positively to Enel’s results, with Equita raising its dividend estimate for 2024.
The consultancy firm now forecasts a dividend of 46 cents per share, supported by higher-than-expected earnings.
Goldman Sachs sees the first-quarter results as exceeding consensus expectations and providing a solid path to outperforming the guidance for 2024.

ETFs with Higher Exposure to Enel

Investors seeking targeted exposure to European utilities, including Enel, can find value in two main ETFs.
These funds offer access to a selection of sector stocks, facilitating a diversified and professionally managed investment strategy.

Xtrackers MSCI Europe Utilities ESG Screened UCITS ETF 1C: This fund tracks the MSCI Europe Utilities ESG Screened 20-35 index, focusing on the largest utility companies in Europe.
Enel holds a weight of 15.33% in the fund.

SPDR MSCI Europe Utilities UCITS ETF: This ETF replicates the MSCI Europe Utilities 20/35 Capped index, which follows major European utility companies.
Enel has a weight of 12.82% in this fund.

Both ETFs offer a full and faithful exposure to the largest utility companies in Europe, providing investors with a diversified investment approach.

In conclusion, Enel’s divestment in Peru marks a significant strategic move to enhance the company’s financial position and focus on more lucrative market segments, garnering positive feedback from analysts and investors alike.

Author: Hermes A.I.

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