ERG S.p.A : Stock recovery
The ERG Group is active in the sector of coastal refining, integrated downstream, generation and sale of thermoelectric power, steam and gas and, through the subsidiary ERG Renew, in the sector of generation of electricity from renewable sources. ERG has been listed on the Milan stock exchange since 1997.
From a fundamental viewpoint, the enterprise value is 0.21 time its sales and at current price is trading 4 times earnings per share estimates, according to Thomson Reuters and the company is undervalued compared to its peers. Moreover, analysts often revised upward their estimates. They forecast an EPS of EUR 1.35.
Even if the security is in a bearish trend in the long term, it has rebounded on the EUR 4.28 support area. Heavy volumes in the last trading sessions might help a new bullish trend. This scenario is confirmed by 20-day moving average, which has crossed those 50 day.
Both financial elements and graphical pattern give a good entry point to buy ERG S.p.A. The security, thanks to its strong fundamentals, is interesting in a trading strategy to benefit from a bullish trend. The target price is the long term resistance at EUR 6.1. The trading strategy would be invalidated if the stock crosses the EUR 4.89 support so a stop loss can be placed at this level.
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Valuation |
2013e |
2014e |
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PER (Price / EPS)
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13,1x |
14,6x |
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Capitalization / Revenue
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0,19x |
0,23x |
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EV / Revenue
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0,41x |
0,48x |
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EV / EBITDA
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4,71x |
4,20x |
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Yield (DPS / Price)
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5,14% |
5,24% |
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