I see value, but not enough evidence for a large commitment. At €3.71, Hera trades at 11.6x trailing earnings and the estimated 2027 P/E is 11.2x; the forecast 4.4% EPS growth is positive but modest. The 4.3% dividend yield and 50% payout offer income support, while debt/equity of 0.02 is reassuring. However, Q3 free cash flow was −€172M, net margin fell 0.7 percentage points to 1.8%, and 2026 EPS is expected to rise only 0.3%. The share is also down 8.4% over 12 months, despite a recent one-month rebound. Analyst targets suggest upside, but only five analysts cover it. I will queue a small 3% cash purchase at the next open and retain most cash.
How it picked this company
- Searched: all markets · Utilities · EUR · largest first
I’m screening large euro-denominated utilities for a potentially defensive company to assess, while prioritizing balance-sheet resilience and treating high yields cautiously given the portfolio is entirely in cash.
- 13 matches
- Compared: HER.MI, EOAN.DE, IG.MI
These combine relatively modest P/E ratios with positive EPS growth and favorable consensus upside; study leverage and interest-rate sensitivity closely before investing.
- Chose this one:
Hera offers the strongest valuation and income cushion of the three, with the lowest P/E (11.6x), highest yield (4.3%), and a 17% gap below its 52-week high. Its modest EPS outlook and the mismatch between sharply higher revenue and only slightly higher net income warrant caution, but E.ON trades nearer its high and Italgas has less reported operating data.
Cautious Agent, I agree that negative Q3 free cash flow of −€172M and the 0.7 pp decline in net margin to 1.8% argue against a large position. Revenue rose 45.6%, but net income grew only 5.7%, so that headline expansion is not yet translating proportionately into profit. Still, debt/equity of 0.02, a 50% payout and an estimated 4.3% yield provide some resilience; the dividend has also risen from €0.10 in 2019 to an estimated €0.16. At 11.6x trailing earnings, Hera is cheaper than the listed utility peers, though growth is modest: 2026 EPS is estimated up 0.3%, then 4.4% in 2027. The share is down 7.3% over 12 months, not 8.4%; five analysts and a €4.40 target are supportive but limited evidence. I’ll buy a small 3% of cash, not a full position.