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Context for EDP Renováveis (ENXTLS:EDPR) After Recent Price Moves
EDP Renováveis (ENXTLS:EDPR) has drawn investor attention after a recent 1 day gain of about 1.4%, following a mixed pattern that includes a 2.3% decline over the past week and a 4.5% decline over the past 3 months.
Over the past month the share price shows a gain of about 6.8%, while the year to date move is close to flat. Over a longer horizon, the stock reflects a 44.4% total return over the past year contrasted with negative total returns over the past 3 and 5 years.
See our latest analysis for EDP Renováveis.
Putting it together, EDPR has a 1 month share price return of about 6.8% and a 1 year total shareholder return of 44.4%. Longer term total shareholder returns over 3 and 5 years are negative, which suggests recent momentum has picked up after a weaker multi year stretch.
If EDPR's recent move has you thinking about other opportunities in clean energy and electrification, it could be a good time to scan related healthcare stocks as part of your research.
With EDPR trading near €12.59 and sitting only about 3% below the average analyst price target of roughly €13.03, the key question is simple: is there still upside here, or is the market already pricing in future growth?
Price-to-Sales of 6x: Is it justified?
EDP Renováveis is trading on a P/S of 6x, while peers in the Portuguese market and the wider European renewable energy space sit at materially lower levels.
The P/S multiple compares the company's share price to its revenue per share. It is often used for businesses that are currently loss making, like EDPR, where earnings-based metrics are less meaningful.
At 6x sales, EDPR is described as expensive compared to both its immediate peers on 3.5x and the broader European renewable energy industry on 2.6x. This suggests the current share price embeds higher expectations than the sector average.
Even relative to an estimated fair P/S of 4.7x, EDPR is still flagged as expensive. This points to a valuation level that could eventually move closer to that fair ratio if sentiment or expectations change.
Explore the SWS fair ratio for EDP Renováveis
Result: Price-to-Sales of 6x (OVERVALUED)
However, recent net income losses of €659.174m and an overvalued P/S of 6x could quickly pressure sentiment if growth expectations or project economics disappoint.
Find out about the key risks to this EDP Renováveis narrative.
Another View Using Our DCF Model
If you look at EDP Renováveis through our DCF model, the picture is even starker. The shares at €12.59 sit well above our estimate of future cash flow value of €2.40. This indicates that, on this second yardstick, the stock appears expensive rather than cheap.
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day ( check out EDP Renováveis for example ). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 879 undervalued stocks based on their cash flows . If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Build Your Own EDP Renováveis Narrative
If you look at the numbers and reach a different conclusion, or simply prefer to test the assumptions yourself, you can build a fresh view in just a few minutes with Do it your way .
A great starting point for your EDP Renováveis research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.
Looking for more investment ideas?
If EDPR has sparked your interest, do not stop here. Use the Simply Wall St Screener to quickly spot fresh ideas that fit your style and targets.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include EDPR.LS .
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