Tags: Enersis | Latin | utility | ENI

Enersis Offers Large-Cap Latin Utility Exposure

By    |   Monday, 19 Dec 2011 08:32 AM

Chilean corporation Enersis (ENI) could fill a portfolio slot for a large-cap Latin America utility stock. The stock provides diversified energy exposure to a significant portion of South America.

Enersis provides power generation, commercial and retail electric power sales in Chile, Columbia, Peru, Brazil and Argentina. Each of these markets provides its own potential and challenges, but this part of the world has the opportunity for significant growth in electrical power usage.

Each Enersis ADR share trading on the NYSE is backed by 50 home country shares. Controlling interest — 60 percent — is owned by the $40 billion Italian utility company ENEL SpA (ESOCF).

For the first nine months of 2011, Enersis reported revenue of $10.22 billion and net income of $1.45 billion. In Chilean peso terms, the revenue was basically flat year over year and the net income was down 12 percent from the previous year.

The profit decline was due to poor results in Chile and Columbia on higher energy costs. The consensus analyst estimate is full year 2011 earnings per ADR share of $1.56, compared to $1.50 earned in 2010. The 2012 consensus estimate is earnings of $1.60.

Dividend policy

Enersis usually pays dividends twice a year. A small dividend is paid in December or January of approximately 15 percent of net income for the first three quarters. The main, larger dividend, paid usually in May, equals 60 percent of the previous year’s net income.

Chilean tax laws require a 35 percent withholding tax on paid dividends. Any taxes withheld for ADR shares held by U.S. investors can be used as a tax credit.

The primary appeal for investors is investment exposure to a high-yield stock in a region with an increasing standard of living and potential for significant growth in electrical power usage.

Enersis is followed by seven stock analysts from different countries. At the present time, five analysts rate ENI a buy and two have a hold rating on the stock.

The company reports next on Jan. 26.

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Chilean corporation Enersis (ENI) could fill a portfolio slot for a large-cap Latin America utility stock. The stock provides diversified energy exposure to a significant portion of South America. Enersis provides power generation, commercial and retail electric power...
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2011-32-19
Monday, 19 Dec 2011 08:32 AM
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