CIG
Companhia Energética de Minas Gerais
$2.17
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 68.8% below fair value
You pay
$2.17
Bear
$6.08
Fair
$6.95
Bull
$7.82
Bear
$6.08
+180.2%
$0.44 × 16x P/E
Fair
$6.95
+220.2%
$0.44 × 19x P/E
Bull
$7.82
+260.2%
$0.44 × 21x P/E
Key Value Driver
Normalized P/E multiple (19x base case)
Implied Market Multiple
4.9x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $2.10 from 5 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $6.95 per share.
Warnings
The company's reported profits differ from official accounting profits by 33%. Check what costs are being left out of the adjusted number.
Dividend-based valuation: $840.07 (above our primary estimate by 10200%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $2.10 (from 5 analysts). Our estimate is 289% above the consensus -- consider that gap carefully.
Financial statements were converted from BRL into USD using USDBRL at 0.1951 USD per BRL.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples