Avangrid Inc (AGR, Financial) has experienced a significant uptick in its stock performance, with a market capitalization now standing at $14.02 billion. The stock price has risen to $36.24, marking a 16.42% gain over the past week and a 13.83% gain over the past three months. This positive trajectory is underscored by the company's current valuation status, with the GF Value at $48.75, suggesting that the stock is modestly undervalued. This is a slight adjustment from the past GF Value of $48.78, which previously indicated a possible value trap, advising investors to think twice before investing.
Understanding Avangrid's Business
Avangrid Inc operates within the regulated utilities industry, focusing on two primary business units: Networks and Renewables. The Networks segment provides electric and natural gas utilities to over 3 million customers across various states, while the Renewables unit is expanding its reach in wind and solar energy. Avangrid's commitment to renewable energy development is evident in its operation of over 8.6 gigawatts of renewable energy across the United States. The company's origins trace back to a spinoff from Spanish utility Iberdrola in 2015, which still retains a significant ownership stake in Avangrid.
Profitability Insights
Avangrid's financial health is reflected in its Profitability Rank of 7/10, indicating a strong ability to generate profits relative to its peers. The company's Operating Margin stands at 11.19%, outperforming 46.95% of 509 companies in the industry. Additionally, Avangrid's Return on Equity (ROE) is 4.03%, surpassing 25.69% of its competitors, while its Return on Assets (ROA) and Return on Invested Capital (ROIC) are 1.87% and 2.27% respectively, further demonstrating its profitability strength. Notably, Avangrid has maintained profitability for the past 10 years, a testament to its consistent performance.
Growth Trajectory and Prospects
Avangrid's Growth Rank is currently at 5/10, reflecting moderate growth potential. The company has seen a 3-Year Revenue Growth Rate per Share of 1.70% and a more modest 5-Year Revenue Growth Rate per Share of 0.20%. Looking ahead, the Total Revenue Growth Rate is estimated at 3.47% for the next 3 to 5 years. Earnings growth also presents a positive outlook, with a 3-Year EPS without NRI Growth Rate of 4.20% and a 5-Year rate of 2.50%. The EPS Growth Rate for the next 3 to 5 years is projected at 2.87%, indicating steady progress in the company's earnings potential.
Investor Confidence and Shareholder Composition
Notable investors have shown confidence in Avangrid's potential. Mario Gabelli (Trades, Portfolio) holds 352,437 shares, representing 0.09% of the company, while Paul Tudor Jones (Trades, Portfolio) and Steven Cohen (Trades, Portfolio) hold 155,259 and 30,500 shares, accounting for 0.04% and 0.01% respectively. These holdings reflect a belief in the company's future performance and strategic direction.
Competitive Landscape
When compared to its competitors, Avangrid holds a strong market position. Alliant Energy Corp (LNT, Financial) has a market cap of $12.56 billion, Evergy Inc (EVRG, Financial) at $11.8 billion, and Pinnacle West Capital Corp (PNW, Financial) at $8.1 billion. Avangrid's larger market cap suggests a competitive edge in the regulated utilities industry, potentially offering a more stable investment opportunity.
Conclusion: Avangrid's Investment Attractiveness
In conclusion, Avangrid Inc's recent stock performance, profitability, and growth prospects paint a picture of a company on the rise. Its modest undervaluation according to the GF Value, combined with a solid profitability rank and consistent growth, positions Avangrid favorably against its competitors. Investors seeking opportunities in the utilities sector may find Avangrid's stock to be an attractive option, especially considering the company's strategic focus on renewable energy developments and its robust financial metrics.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
