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Research

Fortum: Cheap Nordic hydropower

By Juha KinnunenAnalyst
Fortum
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We reiterate our Buy recommendation for Fortum but revise our target price to EUR 15.0 (was EUR 16.0). The Generation segment at the core of the company proved its ability in Q2 even under difficult conditions, but the other parts of the Group pushed the result down more than expected. Our earnings estimates decreased with electricity prices, but less than we anticipated due to Generation’s strong performance. The share is cheap both in absolute terms (2023e P/E 9x) and relative to peers (over 20% discount), and we consider the expected return to be very good, especially considering the high dividend yield. There is still a clear risk of a downward trend in electricity prices.  

Fortum is active in the energy sector. In addition to the provision of electricity, a number of technical solutions are offered in heat optimization as well as apps that are used to keep track of energy consumption. The company also provides charging stations for electric cars. The largest activity is found around the Nordic market. The company was founded in 1998 and is headquartered in Espoo.

Read more on company page

Key Estimate Figures2023-08-07

202223e24e
Revenue7,754.06,791.36,569.9
growth-%20.7 %-12.4 %-3.3 %
EBIT (adj.)1,611.01,601.31,577.2
EBIT-% (adj.)20.8 %23.6 %24.0 %
EPS (adj.)2.001.391.25
Dividend0.911.011.02
Dividend %5.9 %5.6 %5.7 %
P/E (adj.)7.813.014.4
EV/EBITDA7.07.78.0

Forum discussions

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He was elected CEO of Enento about a week ago. Hopefully, he intends to transfer the Fortum money into his new employer’s shares (irresponsible...
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It’s mostly just talk. It will overflow even if the gates are closed. Natural waters cannot be held back for long…
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5
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