Companhia Paranaense de Energia Pfd (ELP) AI Stock Analysis

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Companhia Paranaense de Energia Pfd

(NYSE:ELP)

77Outperform

Copel demonstrates strong financial performance with consistent growth and profitability, buoyed by strategic asset optimization. Despite challenges in wind asset performance and trading, the company is attractively valued with positive market momentum, making it a strong contender in the regulated utilities sector.

Positive Factors

Asset Rotation

Copel announced a positive asset rotation involving the Baixo Iguaçu Hydropower Plant, which adds ~1% NPV to the base-case valuation and could potentially result in additional dividends.

Dividend Policy

Copel announced an additional R$1.3bn dividends related to FY24 results, leading to a 4.3% dividend yield and an 86% total payout FY24.

Real Estate Asset Sales

Copel announced R$264mn real estate asset sales, which could translate into additional dividends.

Negative Factors

Earnings Expectations

Soft GenCo results were partially offset by a good cost-control in the quarter as a result of the ongoing post-privatization turnaround.

Operational Results

Copel reported slightly below estimates 4Q24 operational results with adj. EBITDA at R$1.3bn, down 13% YoY and 5% below BofAe and BBG Consensus.

Companhia Paranaense de Energia Pfd (ELP) vs. S&P 500 (SPY)

Market Cap

$5.20B

Dividend Yield3.02%

Average Volume (3M)227.68K

Price to Earnings (P/E)2.3

Beta (1Y)0.31

Revenue Growth-4.45%

EPS GrowthN/A

CountryUS

Employees4,396

SectorUtilities

Sector Strength90

IndustryDiversified Utilities

Share Statistics

EPS (TTM)3.15

Shares Outstanding335,867,070

10 Day Avg. Volume279,312

30 Day Avg. Volume227,679

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.64

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$12.00

Price Target Upside64.38% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Companhia Paranaense de Energia Pfd Business Overview & Revenue Model

Company DescriptionCompanhia Paranaense de Energia Pfd (ELP), commonly known as Copel, is a prominent utility company based in Brazil. It operates primarily in the electricity sector, engaging in the generation, transmission, distribution, and sale of electric energy. Copel serves both residential and commercial customers, providing essential energy services across the State of Paraná and beyond. The company is also involved in the telecommunications sector, offering a range of services including internet and data transmission.

How the Company Makes MoneyCopel generates revenue through several key streams within the energy sector. Its primary revenue source is the sale of electric energy, which encompasses generation, transmission, and distribution services. The company operates numerous power plants, including hydroelectric, wind, and thermal facilities, which collectively contribute to the generation segment. Revenue from the transmission and distribution of electricity is generated through regulated tariffs set by the Brazilian electricity regulatory agency, ANEEL. Additionally, Copel earns income from its telecommunications operations, offering internet and data services to both residential and corporate clients. The company's financial performance is influenced by regulatory policies, energy demand, and strategic partnerships that enhance its operational capacity and market reach.

Companhia Paranaense de Energia Pfd Financial Statement Overview

Summary

The company exhibits solid financial performance with consistent revenue growth and improving profitability. However, increasing debt levels and high capital expenditures warrant cautious monitoring to maintain liquidity.

Income Statement

Positive

The company exhibits a solid income statement with a consistent revenue growth trend, highlighted by a 5.5% increase in revenue from 2023 to 2024. Gross profit margin has been stable, and net profit margin improved to 12.4% in 2024. However, there was a slight decline in gross profit margin due to increased costs, and the EBIT margin is at 17.9%, indicating room for enhancing operational efficiency.

Balance Sheet

Positive

The balance sheet reflects a healthy equity position with an equity ratio of 44.7% in 2024. Debt-to-equity ratio stands at 0.68, which is manageable, but there is an upward trend in total debt. Return on equity improved to 10.9%, showing better profitability. The company should monitor its leverage closely to mitigate potential risks.

Cash Flow

Positive

Cash flow analysis shows a strong free cash flow generation, despite a marginal decrease in free cash flow from the previous year. Operating cash flow to net income ratio is healthy at 1.21, indicating efficient cash generation from operations. However, significant investing cash outflows suggest high capital expenditure, which should be managed to maintain liquidity.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
22.65B	21.48B	21.93B	23.98B	18.63B
	Gross Profit
4.07B	5.75B	5.00B	4.86B	4.06B
	EBIT
4.06B	2.49B	987.75M	3.59B	5.12B
	EBITDA
5.17B	3.96B	2.55B	6.77B	6.61B
	Net Income Common Stockholders
2.81B	2.26B	1.11B	3.86B	3.90B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.16B	5.65B	2.68B	3.49B	3.22B
	Total Assets
57.38B	55.82B	49.70B	49.54B	46.78B
	Total Debt
17.57B	15.23B	12.66B	11.99B	10.04B
	Net Debt
13.41B	9.60B	9.98B	8.52B	6.82B
	Total Liabilities
31.75B	31.63B	28.57B	27.36B	26.53B
	Stockholders Equity
25.67B	23.89B	20.82B	21.84B	19.96B
Cash Flow		Free Cash Flow
3.26B	3.30B	2.95B	3.04B	3.77B
	Operating Cash Flow
3.39B	3.52B	3.90B	3.39B	4.02B
	Investing Cash Flow
-5.74B	-3.14B	-2.77B	31.91M	-1.67B
	Financing Cash Flow
803.86M	2.70B	-1.92B	-2.88B	-1.79B

Companhia Paranaense de Energia Pfd Technical Analysis

Technical Analysis Sentiment

Positive

Last Price7.30

Price Trends

50DMA

7.07

Positive

100DMA

6.62

Positive

200DMA

6.84

Positive

Market Momentum

MACD

0.15

Positive

RSI

62.93

Neutral

STOCH

40.40

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ELP, the sentiment is Positive. The current price of 7.3 is below the 20-day moving average (MA) of 7.34, above the 50-day MA of 7.07, and above the 200-day MA of 6.84, indicating a neutral trend. The MACD of 0.15 indicates Positive momentum. The RSI at 62.93 is Neutral, neither overbought nor oversold. The STOCH value of 40.40 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ELP.

Companhia Paranaense de Energia Pfd Risk Analysis

Companhia Paranaense de Energia Pfd disclosed 49 risk factors in its most recent earnings report. Companhia Paranaense de Energia Pfd reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Companhia Paranaense de Energia Pfd Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CIG	80 Outperform	$5.61B	3.68	28.91%	11.26%	3.39%	46.79%
ELP	77 Outperform	$5.20B	2.29	9.47%	3.02%	-4.45%	―
ELPC	77 Outperform	$5.20B	9.31	9.47%	3.08%	-4.45%	9.86%
Sector *	65 Neutral	$11.90B	15.77	6.20%	4.52%	5.53%	-8.93%
AES	59 Neutral	$7.33B	4.36	39.65%	6.73%	-3.14%	563.59%
BIP	54 Neutral	$17.91B	2,544.44	0.96%	5.82%	17.33%	-92.62%
HE	54 Neutral	$1.63B	―	-68.17%	―	-4.21%	-760.85%

* Utilities Sector Average

Performance Comparison

ELP

Companhia Paranaense de Energia Pfd

7.30

0.40

5.80%

BIP

Brookfield Infrastructure

28.26

4.15

17.21%

CIG

Companhia Energetica Minas Gerais

1.70

0.02

1.19%

Hawaiian Electric

9.67

-0.99

-9.29%

AES

10.30

-5.14

-33.29%

ELPC

Companhia Paranaense de Energia Sponsored ADR

6.51

0.43

7.07%

Companhia Paranaense de Energia Pfd Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: 5.19% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Positive

The earnings call showcased a strong financial performance with significant dividends and strategic asset optimization. While there were challenges related to wind asset performance and trading, the company maintains a positive outlook with a focus on long-term growth and operational excellence.

Highlights

Strong Financial Performance

Copel reported a fourth-quarter adjusted EBITDA of BRL1.3 billion and net income of almost BRL600 million. For the full year, adjusted EBITDA reached BRL5.1 billion with net income of BRL2.8 billion.

Significant Dividend Proposal

Copel proposed a robust dividend payout for 2024, with a total of BRL2.3 billion, representing a payout ratio of 86% and a dividend yield of approximately 8.4%.

Copel Distribuicao's Record Efficiency

Copel Distribuicao achieved a 23.6% increase in EBITDA in Q4 2024 compared to the previous year, with efficiency reaching almost 46% above the regulatory EBITDA.

Asset Optimization and Value Creation

Copel completed several strategic moves including an asset swap with Eletrobras, the sale of small hydropower generation assets for BRL450 million, and the sale of Baixo Iguacu for BRL570 million.

Long-Term Strategy and Investment Plans

The company maintained a focus on operational excellence, capital allocation, and a consistent energy trading strategy, aiming for significant future growth and efficiency.

Lowlights

Impact of Wind Asset Performance

The performance of wind complexes was negatively affected by curtailment and unavailability, leading to a BRL93 million impact. Curtailment was at 13.1% in Q4 2024 compared to 8.3% in Q4 2023.

Trading Challenges

Copel experienced a negative EBITDA of BRL15 million in trading for Q4 2024, primarily due to lower trading margins and price variations in submarkets.

Increased Leverage Due to Grant Bonus Payment

Leverage increased to 2.6 times net debt over EBITDA due to the grant bonus payment for the renewal of power generation plants, though it remains below the 3.5 times covenant limit.

Company Guidance

In the earnings call for the fourth quarter of 2024, Companhia Paranaense de Energia (Copel) reported sound financial results, highlighting an adjusted EBITDA of BRL1.3 billion and a net income of approximately BRL600 million for the quarter. For the entire year, the adjusted EBITDA reached BRL5.1 billion, with a net income of BRL2.8 billion. Despite challenges such as curtailment and the temporary unavailability of some wind turbines, Copel Distribution significantly contributed to these results, achieving an EBITDA efficiency almost 46% above the regulatory level. The company proposed robust dividends totaling BRL2.3 billion for the year, reflecting a payout ratio of 86% and a dividend yield of approximately 8.4%. Copel's strategy included noteworthy asset swaps and sales, such as the asset swap with Eletrobras and the sale of its stake in Baixo Iguacu for BRL570 million, indicating a disciplined approach to capital allocation. The company also emphasized its ongoing efforts to optimize operations, improve asset management, and capitalize on opportunities in energy trading, while maintaining strict cost controls and a strong focus on sustainable growth.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.