VALENCIA, SPAIN - JANUARY 11, 2015: The top of the Iberdrola Buidling in Valencia. Iberdrola is a Spanish public multinational electric utility with 31,330 employees in dozens of countries on four continents serving around 31,67 million customers.
Iberdrola share price has made a strong recovery in the past few weeks as utility stocks crawl back. The stock rose to a high of €11, which was the highest level since August 25. It has risen by more than 19% above the lowest level in October, giving it a market cap of over €69 billion.
Iberdrola is a major Spanish utility company that operates in several countries internationally. It is the second-biggest company in Spain after Inditex. The firm operates under several brands, including Scottish Power, Avangrid, NeoEnergia, Iberdrola Mexico, Iberdrola Espana, and Iberdrola Internacional.
Iberdrola operates in the sustainable energy business, making it an attractive buy for investors focused on ESG (Environment, Social, and Governance). It is also investing about ~90GW of renewable energy products, with most of them being onshore and offshore wind, solar, and batteries. In November, the company pledged to invest $47 billion in energy transition in 2023.
Iberdrola has also shifted its business focus to the relatively stable United States. It argues that the European energy sector faces significant challenges. For example, European policymakers voted to levy a windfall tax on energy companies. They argued that these funds will go to families and businesses.
The most recent results showed that Iberdrola’s net income rose by 29% in the first nine months of the year to €3.1 billion. This performance was dragged by its Spain business, where its net profit crashed by 14% because of higher gas prices. In total, its EBITDA rose by 17% to €9.5 billion. The firm increased its dividend by 5.9% to 18 cents.
The key challenge for Iberdrola is the significant amount of debt it holds in its balance sheet. It has about €40 billion in debt. Fortunately, the company has over €24 billion in liquidity and most of its debts are in fixed rates.
Iberdrola has a trailing PE ratio of 16.87, which is lower than that of other utility firms like Southern Company, Duke, and American Power Company.
The daily chart shows that the IBE share price has been in a bullish trend in the past few weeks. It has managed to move above the important resistance at €10. The 50-day and 200-day moving averages have made a bullish crossover pattern while the Relative Strength Index (RSI) moved above the overbought level.
It is also approaching the important resistance point at €11. Therefore, the outlook for the stock is bullish, with the next key level to watch being at €11.45. A drop below the support at €10.70 will invalidate the bullish view.
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