Equity valuation thesis : EDP renewables

• Autor(a) principal: Fernandes, Diogo Lespagnol
• Data de Publicação: 2017
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/25470
• topic: Domínio/Área Científica::Ciências Sociais::Economia e Gestão

This dissertation has the intent of valuating EDP Renewables, a subsidiary company from EDP, listed on PSI20, inserted in the Utilities Industry - renewable energy. As a result of the energy sector transformations, fear of fossil fuel shortages and environmental protection, the progressive search for clean sources of power becomes essential to valuate companies that can be game changers. To estimate the share price the Discounted Cash Flow method was used in both approaches: the Free Cash Flow to the Firm & the Free Cash Flow to Equity, obtaining thus an equity value of €m6.405 and €m6.248 respectively – this converts into a share price of €7.42 and €7.22. Rest on the Dividend Discount Model, the equity value is €m5.428 implying a share price of €6.28. As reported by the Multiples EV/Revenue, EV/EBITDA and Price/CF per share, prices of €8.60, €7.25 and €7.08 were estimated. Finally a sensitivity analysis was performed due to the uncertainty associated the company’s environment. In conclusion, a final price of 7.11€ per share and a recommend a buy action is in order (actual price: €6.80). As benchmark, valuations from Morgan Stanley (€8.10) and Macquire Research (€6.2) which allowed us to conclude that the value reached in this thesis is in line with the opinion of others financial institutions and provides this dissertation with practical usefulness.