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Eni (E) Eyeing Retail Renewable Energy Business Spin-Off

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Eni S.p.A. (E - Free Report) is considering making the new retail and renewable energy business an independent unit in 2022, per Reuters. The company can list a minority stake to raise money, which will likely be used in energy transition.

The Italian integrated company’s renewable energy generation and powerselling business will likely be incorporated in the spinoff that might be worth around €10 billion, noted Reuters. It intends to become carbon neutral by 2050, abiding by the Paris Agreement. Fourth-quarter 2020 power sales in the open market, under the Power & Renewables business, declined 4% year over year owing to a downturn in economic activities. Overall, from EGL, Power and Renewables, the company reported a profit of €132 million for the December quarter, reflecting a 15% year-over-year decline.

To achieve climate targets, the energy major might merge the retail and renewable businesses. The combined business’ core earnings are projected to reach €1 billion in 2024. This new entity is expected to come online by June. Following this move, the spinoff might take place, which will then lead to a 20-30% listing. Via a similar step, Repsol, S.A. (REPYY - Free Report) of Spain is looking to raise money to bankroll its energy transition and decrease debt.

Eni is strongly focused on increasing renewables capacity. Notably, the company expects to install a total of 4 gigawatts (GW) of wind and solar energy capacity across the world by 2024. Thus, the firm is well positioned to capitalize on the massive demand for cleaner energy. Markedly, its power generation capacity will likely be 15 GW by 2030 and 60 GW by 2050.

Price Performance

Eni’s shares have increased 36% in the past year compared with 30.8% rise of the industry it belongs to.

Zacks Rank and Other Stocks to Consider

Currently, the stock sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the energy space include Berry Corporation (BRY - Free Report) and EOG Resources, Inc. (EOG - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Berry’s bottom-line estimates for 2021 have witnessed three upward revisions and no downward movement in the past 60 days.

EOG Resources’ bottom line for 2021 is expected to increase 205.5% year over year.

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