Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5967
    -0.0039 (-0.65%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • OIL

    82.00
    +0.65 (+0.80%)
     
  • GOLD

    2,225.80
    +13.10 (+0.59%)
     

Is Eni Sp.A. (BIT:ENI) An Industry Laggard Or Leader?

Eni Sp.A. (BIT:ENI), a €54.82B large-cap, operates in the oil and gas industry which has seen a prolonged oil price downturn since 2014. However, energy-sector analysts are forecasting for the entire industry, a strong double-digit growth of 19.62% in the upcoming year , and an enormous growth of 37.02% over the next couple of years. However this rate still came in below the growth rate of the IT stock market as a whole. Is the oil and gas industry an attractive sector-play right now? Today, I will analyse the industry outlook, and also determine whether Eni is a laggard or leader relative to its energy sector peers. View our latest analysis for Eni

What’s the catalyst for Eni’s sector growth?

BIT:ENI Past Future Earnings Jun 11th 18
BIT:ENI Past Future Earnings Jun 11th 18

The oil price collapse drove a negative 40% growth in the energy sector in the past five years. Although profitability is always a key metric, in the oil and gas industry, growth in production and reserves has often been more important. However, recently the sector saw a reversal in the downturn, and in the previous year, the industry saw growth in the twenties, beating the IT market growth of 18.13%. Eni leads the pack with its impressive earnings growth of over 100% last year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Eni poised to deliver a 30.72% growth over the next couple of years compared to the industry’s 19.62%.

Is Eni and the sector relatively cheap?

BIT:ENI PE PEG Gauge Jun 11th 18
BIT:ENI PE PEG Gauge Jun 11th 18

The energy sector’s PE is currently hovering around 16.41x, in-line with the IT stock market PE of 18.56x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a lower 6.96% compared to the market’s 11.10%, illustrative of the recent sector upheaval. On the stock-level, Eni is trading at a PE ratio of 16.41x, which is relatively in-line with the average oil and gas stock. In terms of returns, Eni generated 6.96% in the past year, in-line with its industry average.

Next Steps:

Eni’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If Eni has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at Eni’s fundamentals in order to build a holistic investment thesis.

ADVERTISEMENT
  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Historical Track Record: What has ENI’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Eni? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.