Equity valuation of Iberdrola S.A.

Abstract

The purpose of this dissertation is to value the giant Spanish electric utility company, Iberdrola S.A. The valuation is supported by in-depth industry and company analysis, and is based on the Adjusted Present Value (APV) method. Three scenarios are designed using the industry forecasts provided by the International Energy Agency and Iberdrola9s historical developments. The APV method is complemented by a relative valuation based on current trading multiples observed for Iberdrola9s peers. The APV yields an equity share value of €12.43 in the base scenario (a 15.45% upside). Based on the trading multiples the company is valued at a premium compared to its peers. However, I am convinced that at the current price (€10.77) Iberdrola9s stock is below its fair value based on the detailed and forward-looking analysis performed in the APV and the promising outlook for renewables in this decade. Consequently, I conclude with a BUY recommendation based on a target price of €11.98 (+11.25% upside), slightly more conservative than the mean target prices of analysts following the stock (€12.19).

Date of Award	8 May 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Fani Kalogirou (Supervisor)