Analyst Note| Tancrede Fulop, CFA |
We maintain our fair value estimate of EUR 15.5 per share along with our no moat rating after Red Electrica released nine-month results above FactSet consensus on the bottom line thanks to a lower tax rate and finance costs. The dividend floor of EUR 1 through 2022 offers a 5.7% dividend yield, above the 4.5% sector average. However, the floor will be reduced to EUR 0.8 in 2023-25, implying a 4.5% yield. Also, we project flat EPS through 2025. This unappealing earnings outlook reflects the end of the remuneration of assets commissioned before 1998, due in 2024. Shares appear overvalued.