Goldman Sachs Highlights Top European Utility Stocks for Strong Earnings

Goldman Sachs has identified several European utility companies poised to deliver strong quarterly results ahead of the earnings season. The investment bank highlights RWE, Naturgy, Enel, and EDP as potential standouts, driven by trading activities, flexible generation, and pumping hydro. Commodity volatility, elevated prices, and solid power demand are expected to support these companies' performances.

RWE is projected to report a nine-month net profit of €1.6-1.7 billion, roughly 75% of the full-year consensus estimate of €2.25 billion. The bank notes that solid flexible generation and trading activities could lead to upside surprises. RWE is scheduled to report earnings on November 11.

Naturgy Energy Group is estimated to have nine-month EBITDA of €4.3-4.4 billion and net profit of approximately €1.75 billion. The bank suggests Naturgy could exceed its full-year guidance of 'above €2.1 billion,' assuming a normal fourth quarter. Strong gas prices and flexible generation are expected to bolster results.

Enel SpA is projected to have nine-month EBITDA of €17.8 billion and net profit of €5.7-5.8 billion, representing over 75% of Goldman Sachs' full-year net profit projection of €7.47 billion. The bank anticipates acceleration in Italy from flexible generation and trading, driven by strong power consumption. Enel reports on November 12.

EDP is seen with clear upside risk to full-year guidance, with third-quarter EBITDA projected at nearly €1.2 billion, implying nine-month EBITDA at €3.9 billion. The bank expects strong profits from pumping and flexible generation, with asset rotation gains of €200-250 million potentially making the current guidance conservative. EDP reports on November 6.