EQUITY REPORT - IBERDROLA

09/12/2014

Business

Company:

Iberdrola

Chairman/CEO:

Jose Ignacio
Sanchez Galan

Sector: Electric Utility

Ticker : IBE.MC

Share Price:(15/11/2014)
5.49

Stock Exchange:
IBEX 35

Market Capitalization:
34.6 Billions

Shares
Outstanding: 6.3
Billions

Fiscal Year: 2013

Volume: 30.2

Major Shareholders :

Qatar Investment
Holding; Bankia,
ACS, Kutxabank.

Iberdrola is a Spanish company founded in 1992, headquartered

in Bilbao, Spain. The core businesses of the company cover
Natural Gas and Electric Energy. When Jose Ignacio Sanchez
Galan became CEO, in 2001, the company started to invest
more in Renewable Energies. Iberdrola is now keeping their
plans of international expansion, making their presence more
notorious in countries such as the United Kingdom and United
States.

Company News
According to Reuters, Iberdrola is eager to invest in the
American market. In order to do so, they are willing to divest in
other markets in which they are present.
Also according to news published by Reuters, it is noticeable

Revenues and profits

that Iberdrola is heavily investing in Renewable Energies, across

several markets, recurring to partnerships with local companies.

Stock Performance

Net
Revenue
Net Profit
2008 2009 2010 2011 2012

Main Competitors
Endesa S.A.
Red Electrica Corp. S.A.

Multiples
2014

Company

Sector

Price to Sales

1.1

3.2

EV / EBITDA

8.9

14.3

PER

10.7

14.8

PBV

0.97

3.8

Corporate Finance Department | ffc@fepfinanceclub.org | www.facebook.com/FEPFinanceClub

Valuation Results
According to our valuation, the value per
share of the company is higher than its price
per share. That means, under our
assumptions, Iberdrola is undervalued by the
market.

Financial Ratios
0,00

5,00

10,00

15,00

2013

Payout Ratio

2012

EPS

2011

DPS

2010

PER

Enterprise Value

63.8 bn

Value per Share

5.50

Assumptions

2009
0,00 0,20 0,40 0,60 0,80 1,00

Cost of Equity (Ke)

DuPont Analysis
40%
35%

Profit
Margin

2,90
2,80

20%

15%

Market Premium

Asset
Turnover

Kd

2,60

ROE

Default Spread

2,50

0%
2011

2012

2010

2011

2012

30,00%
Source: KPMG

7,527

7,650

7,726

7,205

Dep. &
Am.

2,698

3,145

3,349

4,770

CAPEX

6,270

5,349

4,366

4,107

- 1,462

630

- 230

1,466

Taxes

1,448

1,351

1,313

730

FCFF

1,270

319

2,277

900

Andr Moreira

D/EV

89.16%

WACC

6.89%

Growth Rate (g)

2.30%

2013

EBITDA

WC

2.00%
Source: Damodaran

2013

Valuation Summary
Millions
()

8.30%
Source: Damodaran

3.74%

Tax rate

Leverage

2,40
2010

1.74%
Source: Bloomberg

2,70

10%
5%

Source: Damodaran

Risk Free (Rf)

30%
25%

1.08

Beta
3,00

10.70%

Drio Veiga

Sensitivity Analysis
Share Value
()

W
A
C
C

Pedro Reis

g
2.28%

2.30%

2.32%

6.82%

5.61

5.66

5.71

6.89%

5.45

5.50

5.54

6.96%

5.29

5.34

5.38

Lus Oliveira

Corporate Finance Department | ffc@fepfinanceclub.org | www.facebook.com/FEPFinanceClub