Key Takeaways:
- The Income Floor: Naturgy Energy (NTGY) has committed to a minimum annual dividend of €1.70 per share through 2027, offering a yield of roughly 6.6% at current prices.
- Price Projection: Our model projects the stock could inch up to €28 per share by December 2027.
- Expected Returns: This target implies a modest 6.3% annualized return, positioning the stock as a pure income play with minimal capital appreciation potential.
- Liquidity Boost: The company successfully executed a tender offer to increase its free float, allowing it to return to the MSCI indexes, which should stabilize trading volumes.
Now Live: Discover how much upside your favorite stocks could have using TIKR’s new Valuation Model (It’s free)>>>
Naturgy Energy Group (NTGY), The Spanish gas and electricity giant recently reported solid, if unspectacular, nine-month results. EBITDA held steady at €4.21 billion, maintaining the record levels seen in the previous year despite a 14% drop in Brent oil prices.
Management’s primary focus has been on financial engineering to unlock value. They recently completed a share repurchase to restore the company’s free float, successfully regaining their spot in the MSCI indexes. This move is critical for institutional liquidity.
However, the growth engine seems to be idling. While the dividend is attractive, looming regulatory risks, such as the EU’s prohibition on Russian LNG imports effective January 2027, could weigh on future volumes.
With the stock trading at €25.56, is the yield enough to justify holding a company with flat earnings growth?
See analysts’ full growth forecasts and estimates for Naturgy stock (It’s free) >>>
What the Model Says for NTGY Stock
We evaluated Naturgy’s potential through 2027, balancing its strong cash generation against a shrinking revenue base and regulatory headwinds.
Our model suggests a “steady as she goes” scenario. Using a forecast of -0.2% Revenue Growth (CAGR) and 18.0% Operating Margins, the model projects the stock will drift to €28 by the end of 2027.
This implies a 6.3% annualized return over the next two years.
Essentially, almost all of your return comes from the dividend. The stock price itself is expected to remain range-bound, making this a “bond proxy” suitable only for conservative income investors.
Estimate a company’s fair value instantly (Free with TIKR) >>>
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for NTGY stock:
1. Revenue Growth: -0.2%
While the company is expanding in renewables, where EBITDA reached €452 million, up slightly from 2024, the core gas business faces volatility. Management noted a decoupling of gas and oil indexes, with TTF gas prices rising 26% while oil fell, creating a complex hedging environment.
Furthermore, currency headwinds in Latin America (specifically the depreciation of the Argentine peso and Brazilian real) are dragging on reported figures.
We forecast essentially flat-to-negative revenue growth of -0.2% CAGR through 2027, reflecting a business in maintenance mode rather than expansion mode.
2. Operating Margins: 18.0%
Despite lower demand in some regions, Naturgy generated 54% of its EBITDA from regulated activities (networks), providing a stable floor for earnings.
The company is also strictly managing capital allocation. Investments totaled €1.2 billion in the period, with a disciplined focus on networks (45%) and renewables (35%).
We project operating margins to stabilize at 18.0%, as the company continues to optimize its portfolio and benefit from tariff adjustments in Latin America.
3. Exit P/E Multiple: 13.0x
Valuation is undemanding, but for a reason.
Naturgy currently trades at a P/E of roughly 13.3x, which is within its historical range.
Our model assumes an exit multiple of 13.0x by 2027.
We chose a multiple that stays close to current levels because there are no major catalysts to drive a re-rating. Without significant earnings growth, investors are unlikely to pay a higher premium for the stock. The valuation simply reflects the utility-like nature of its cash flows.
Build your own Valuation Model to value any stock (It’s free!) >>>
What Happens If Things Go Better or Worse?
The upside is capped, but the downside is also buffered by the dividend (these are estimates, not guaranteed returns):
- Low Case: If gas regulation tightens or Latin American currencies crash further, returns could turn negative to -2.5% annual return.
- Mid Case: If the company executes its strategic plan as promised, we project a minimal 1.0% annual return (excluding dividends, capital appreciation is flat).
- High Case: Even in a bullish scenario with favorable energy prices, returns top out at just 3.2% annual return (capital appreciation only).
(Note: The returns above refer to price appreciation. Total shareholder return would be higher when adding the ~6% dividend yield.)
See what analysts think about NTGY stock right now (Free with TIKR) >>>
How Much Upside Does Naturgy Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
