Goldman Sachs names top utility stocks ahead of earnings season

Investing.com -- Goldman Sachs expects strong quarterly results from several European utility companies, with RWE, Naturgy, Enel, and EDP positioned to potentially exceed their full-year guidance. The investment bank highlights trading activities, flexible generation, and pumping hydro as key drivers, supported by commodity volatility, elevated prices, and solid power demand.

Goldman Sachs anticipates that certain companies may book restructuring provisions in the fourth quarter to support future cost savings, which could limit potential earnings beats in 2026 but improve profits in 2027-28.

RWE (RWEG.DE)

Goldman Sachs projects RWE could deliver nine-month net profit of €1.6-1.7 billion, representing approximately 75% of the full-year Bloomberg consensus estimate of €2.25 billion. The bank notes that solid flexible generation and trading activities may potentially surprise to the upside. RWE reports earnings on November 11.

Naturgy Energy Group (NTGY.MC)

Goldman Sachs estimates nine-month EBITDA at €4.3-4.4 billion and net profit at approximately €1.75 billion. The bank suggests Naturgy could potentially exceed its full-year bottom-line guidance of "above €2.1 billion," assuming a normal fourth quarter. This would imply 80-85% of full-year guidance already met with one quarter remaining. Solid gas prices and flexible generation are expected to support results.

Enel SpA (ENEI.MI)

Goldman Sachs projects nine-month EBITDA of €17.8 billion and net profit of €5.7-5.8 billion, representing more than 75% of the bank's full-year net profit projection of €7.47 billion. The bank expects acceleration in Italy from flexible generation and trading, noting strong power consumption in Italy and Spain. Enel reports on November 12. Goldman Sachs sees ongoing scope for positive earnings revisions, though notes uncertainty around potential incremental restructuring charges in the fourth quarter.

Energias de Portugal (EDP.LS)

Goldman Sachs sees clear upside risk to full-year guidance, projecting third-quarter EBITDA at nearly €1.2 billion, which would imply nine-month EBITDA at €3.9 billion. The bank expects strong profits from pumping and flexible generation. Considering expected asset rotation gains of €200-250 million for the rest of the year, full-year guidance of €5.3 billion EBITDA could prove conservative. EDP reports on November 6.

Original Article

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