Key Morningstar Metrics for Iberdrola
- Fair Value Estimate: EUR 15.40
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Medium
What We Think of Iberdrola Stock
Iberdrola IBE released its 2025-28 business plan confirming the step up in networks investments announced last July while reducing its renewables investments for the third time since 2022.
Why it matters: Iberdrola is the first European utility to hold a capital markets day since the US One Big Beautiful Bill Act was passed.
- It trimmed net renewables investments by 29% versus the 2024-26 plan. This is driven by the US and Brazil. In the US, there will be no commissioning beyond projects under construction.
- On the back of higher investments, the group targets to increase the networks’ share of the group’s EBITDA from 38% in 2024 to 55% in 2028 to drive a rerating of the shares.
The bottom line: We confirm our fair value estimate of EUR 15.4 along with our no-moat rating for Iberdrola. Shares look fairly valued.
- Our 2028 networks’ EBITDA estimate of EUR 9.9 billion is in line with the EUR 9.5 billion-EUR 10 billion guidance, while our electricity production’s 2028 EBITDA of EUR 9.4 billion is above the EUR 8.5 billion guidance due to the reduction in renewables investments.
- Although our EUR 19.4 billion 2028 EBITDA is above the EUR 18 billion guidance, our net income estimate of EUR 7.4 billion is slightly below the EUR 7.6 billion guidance due to the limited accretion of renewables investments.
Key stats: Iberdrola will invest EUR 50 billion on a net basis over 2025-28, implying EUR 12.5 billion of annual investments, a bit above the EUR 12 billion previously planned over 2024-26. Two-thirds will be dedicated to networks versus 60% in the 2024-26 plan.
- The UK will get the largest share of networks investments with 38% followed by the US with 32%.
- The group confirmed its dividend policy based on a 65%-75% payout while raising the dividend floor from EUR 0.55 in the 2024-26 plan to EUR 0.64, that is the 2024 dividend.
Long view: Iberdrola aims to maintain at least a high-single-digit adjusted net profit annual growth through 2031, a bit above our 6.7%.
This analysis was originally published as a stock note by Morningstar Equity Research.
