Analysis of Enel 2016

Company: Enel 

ISIN IT0003128367 | WKN 928624 

Business: An Italian energy and gas company. They have hydroelectric, thermoelectric, nuclear, geothermal, wind, solar and other renewable power plants. They also have the network not only for electricity but also for gas pipelines in large parts of Italy. 

Active: Present in over 30 countries. Heaviest involvement in Italy and Iberia. 

P/E: 16.7

Here you can find the previous analysis of Enel 2015. 

The P/E for Enel is so, so with 16.7 but the P/B is excellent with 1.1 which gives a buy signal from Graham. The earnings to sales are not very impressive with only 3% and neither is the ROE with 6.8%. The book to debt ratio is also very low with 0.3 but nothing unusual for the business.
In the last five years they have had an awful yearly decrease in revenue by -1% which then gives us a motivated P/E of around 8 and Enel is then also highly overvalued by the market.
They pay out an excellent dividend of 4.1% which unfortunately correspond to almost 70% of their earnings so they need to start pushing up those earnings!

Conclusion: Graham says yes to Enel and I am a bit more cautious. The P/E is ok, the P/B is excellent, the ROE is bad and the dividend is also very good but it comes at a high price. At this price I will not increase my position in Enel but I will also not sell off the shares that I currently have. I like their new logo by the way...

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