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Eni (E) Stock Rises 17.3% YTD: More Growth On the Horizon?

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Eni SpA’s E shares have jumped 17.3% in the year-to-date period, outperforming the overall sector’s 16.7% rally. The company managed to navigate through last year’s coronavirus-induced weakness in the market and positioned itself for better returns in the future. Based in Rome, Italy, it is among the leading integrated energy players in the world, with a market cap of $43.8 billion.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Can It Retain Momentum?

The answer is yes and before we get into the details, let us show you how its estimates for 2021 stand. The Zacks Consensus Estimate for 2021 earnings per share stands at $2.13, signaling a massive improvement from last year’s loss of 48 cents. The consensus estimate for 2021 revenues is pegged at $77.8 billion, indicating a rise from $51.3 billion in 2020.

Now let’s delve into what’s driving the Zacks #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

Upstream Growth

Eni’s constant efforts to expand the upstream business will go a long way in generating growth. The company has recorded massive production growth in the past few years, thanks to ramped-up production from Egypt’s Zohr and Noroos gas fields. Also, the start-up of key upstream projects in Algeria, Mexico, Egypt, Indonesia and Norway is expected to enable the company to achieve a compound annual growth rate of 4% from 2021 through 2024. Recently, it succeeded in commencing production from the Cuica field, located offshore Block 15/06 in Angola, within just more than four months of discovery.

Its exploration campaign offshore Angola led to multiple discoveries that are expected to hold 2 billion barrels of oil. Also, the company made a natural gas discovery in the Great Nooros Area, located in the Nile Delta, offshore Egypt. Due to this discovery, the company expects more than 4 trillion cubic feet of natural gas in place in the Great Nooros Area. With demand for natural gas expected to rise in the coming days as countries are looking for lowering emissions, Eni’s natural gas production will bring tremendous growth opportunities.

Its latest discovery is in Block 10 of the Cuenca Salina Sureste Basin, located off the coast of Mexico. The new oil find is expected to have 150-200 thousand barrel of oil equivalent in place, per the company’s preliminary estimates. The developments will keep strengthening Eni’s footprint in the respective regions, and boost organic growth as well as cash flow.

Low Emission Investments

The company announced that it is planning for listing or selling a minority stake in its newly formed retail and renewable energy business unit. The target of the new business, as expected by the integrated player, is to deliver more than 5GW of renewable power generation capacity by 2025. Its constant efforts to expand the renewable energy portfolio through acquisitions and project developments are attracting environment-focused investors. Eni is fast tracking the renewable business and expects to have more than 15 gigawatts of installed capacity by 2030.

Its chemical company Versalis has made a deal with Saipem SpA to promote the PROESA® technology, which is used for producing sustainable bioethanol and chemicals. This deal for advanced biofuel can play a huge role in Eni’s overall decarbonization program. With global bioethanol demand expected to rise in the coming days as the drive for lower emissions and greener fuels strengthen, the deal is likely to be extremely profitable and boost the sustainability of Eni’s chemicals business.

Other Stocks to Consider

Other top-ranked stocks from the energyspace include Hess Midstream LP HESM, Range Resources Corporation RRC and Cheniere Energy, Inc. LNG, each having a Zacks Rank #2 (Buy).

Hess Midstream’s bottom line for 2021 is expected to increase 19.1% year over year.

The Zacks Consensus Estimate for Range Resources’ earnings for 2021 is pegged at $1.57 per share, indicating a massive improvement from the year-ago loss of 9 cents.

The consensus estimate for Cheniere’s earnings for 2021 is pegged at $2.80 per share, signaling a major improvement from the year-ago loss of 34 cents.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Eni SpA (E) : Free Stock Analysis Report

Range Resources Corporation (RRC) : Free Stock Analysis Report

Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report

Hess Midstream Partners LP (HESM) : Free Stock Analysis Report

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