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Genesis Energy Ltd GNE

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Morningstar’s Analysis

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Lower Electricity and Kupe Volumes in First Quarter Unlikely to Derail Genesis' Year

Adrian Atkins Senior Equity Analyst

Analyst Note

| Adrian Atkins |

Narrow-moat Genesis Energy had a solid September quarter. We leave our earnings forecasts unchanged, expecting fiscal 2022 EBITDA in the middle of the NZD 420 to 440 million guidance range, implying low-single-digit percent growth on last year. We maintain our NZD 2.50 fair value estimate and consider the stock to be materially overvalued. While Genesis offers an attractive forecast yield of 5.4%, the long-term outlook is depressed by depletion of the Kupe oil and gas field--which currently contributes a fourth of EBITDA, and closure of thermal power stations.

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Company Profile

Business Description

Genesis Energy is one of New Zealand's leading producers of electricity, accounting for more than 15% of the country's total generation. The firm enjoys a strong retail presence, with the highest retail market share, at over 25%. The company has a mix of renewable and thermal assets, with the latter accounting for about 55%-60% of the firm's overall production. The company has a 46% interest in the Kupe oil and gas field.

155 Fanshawe Street, Genesis Energy Level 6
Auckland, 1010, New Zealand
T +64 95802094
Sector Utilities
Industry Utilities - Independent Power Producers
Most Recent Earnings
Fiscal Year End Jun 30, 2022
Stock Type
Employees 1,149