Endesa Chile

Endesa Chile (EOC - Snapshot Report) is a play on growth in Latin America. The stock is attractively valued, trading at 11.6x forward earnings.

Company Description

Endesa Chile generates electricity in Chile and handles 36% of the country's installed capacity covering 9% of the Chilean population. 70.7% of the installed capacity is hydroelectric. 28.9% is thermal and 0.4% is wind generated.

Endesa Chile has operations throughout Latin America, including Argentina which represents 14% of the Argentine electricity grid, Columbia with 21% of its installed capacity, Peru with 28% of the Peruvian grid and installed capacity in Brazil.

Net Income Rose 45% in 2009

On Jan 27, Endesa Chile reported its 2009 annual results which saw net income rise about 45% compared with 2008. Revenue, however, fell 4.6% year over year.

Hydro generation increased 7.9%, mainly in Chile and Argentina, on a consolidated level.

Consolidated debt fell 5.8% by the end of Dec 2009 compared with the same period in Dec 2008.

The company also had ample liquidity including uncommitted credit lines for $231 million in the Chilean capital markets, committed credit lines of $200 million in undrawn revolving debt facilities in the international market and committed credit lines for $100 million in undrawn revolving debt facilities in the local market.

Cash and cash equivalents equaled $880 million.

2010 Zacks Consensus Estimate Rises

Many times, analysts only cover the year on the foreign based companies. On Endesa, there are currently 4 estimates for 2010 compared with only 1 estimate for the next two quarters.

Analysts are bullish on 2010, however. The Zack Consensus is up 9.3% to $4.24 from $3.88 per share in the last 30 days with 1 estimate moving higher during that time period.

Growth is expected to continue in 2011. Analysts forecast an 11.74% increase in earnings to $4.74 per share.

Value Fundamentals

Endesa Chile has attractive valuations. The Zacks #1 Rank (strong buy) stock is trading with a price-to-book ratio of just 2.3. It also has a stellar 5-year average return on equity (ROE) of 16.40%. Last year its ROE was 33.35%, well above the industry average of 9.58%.

Endesa Chile also pays a dividend, which is yielding 1.70%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.

Read the full analyst report on EOC