Beautiful, cheap and… risky Ibex 35 values?

Autumn has brought fresh air to the parquet floors, but also some concern. He Ibex 35 has once again moved around its all-time highs, above 16,000 points, and that always raises a well-known question among investors: is there value left in a market that seems to have discounted it all? Apparently yes, because there are companies that continue to trade at attractive multiples, but the price does not always tell the whole story. Behind some values “cheap” debt structures are hidden heavy, tight margins or a regulatory scenario that can distort the most optimistic plans.

The Spanish market is no stranger to this double edge. As interest rates begin to stabilize in Europe and inflation moderatescompanies face a new stage in which financing no longer flows so easily. In this context, five big selective ones illustrate that paradox to trade at tempting prices and, at the same time, carry risks that the attentive investor cannot ignore.

Telephone

Telefónica is the most obvious example. The company has cut its dividend in half, from 0.30 to 0.15 euros per share, within the new Transform & Grow strategic plan presented a few days ago. With this movement, The group seeks to accelerate the reduction of its debt, which is around 28.2 billion euros, and place its leverage ratio below 2.5 times Ebitda, that is, earnings before interest, taxes, depreciation and amortization, in the coming years.

Despite the initial blow, the objective is to strengthen the financial structure and sustain moderate revenue growth of between 1.5 and 2.5% annually until 2028. The company maintains a presence in key markets in Europe and Latin America, but the traditional telecommunications business continues under pressure from competition and the high investment required by the network. The new plan aims to balance long-term profitability with a more prudent debt policy, although the immediate challenge will be to regain market confidence after years of declines in stock market capitalization.

IAG

IAG lives a different situation, but with similar nuances. After years of restrictions, the group’s airlines have returned to operating with normality and the results reflect it. The net profit for the first nine months of the year amounts to 2,700 million, 15% more than in the same period of the previous year. Improving demand and normalization of international routes have returned margins to pre-pandemic levels.

Despite this, the market does not finish rewarding the recovery. Net financial debt is around 6,000 million, compared to 7,500 million a year earlier, which reduces its leverage ratio to 0.8 times Ebitda. The airline trades with a PER estimated around seven times profits, still low compared to other European airlines, but the cost of fuel and the volatility of air traffic continue to set the pace. The transatlantic business maintains the group’s profitability, although competitive pressure and energy prices remain risks latent for the coming quarters.

Endesa

At the opposite extreme of volatility is Endesa. Its regulated business provides it with stability and a dividend yield close to 5%, one of the highest on the Ibex. Its shares are listed with a P/E estimated around 15 times and net debt remains close to 11,000 million, with a net debt to Ebitda ratio close to two times.

At first glance, energy seems like a safe haven. However, its main risk It is not in the balance sheet but in the BOE. The energy regulatory framework in Spain and the possible tax reforms on the extraordinary profits of electricity companies add a factor of uncertainty that the market never forgets. In a stable rate environment, cash generation remains strong, but any regulatory adjustment could alter your forecasts.

Aena

Aena represents the case of controlled optimism. Air traffic has exceeded pre-2019 levels and income from airport taxes They advance by double digits. The company maintains a net financial debt of around 5,100 million and a net debt to Ebitda ratio of 1.4 times, one of the most comfortable figures in the sector.

In its favor it must be said that the stock has recovered part of the lost ground, although It is still trading below pre-pandemic highs. Your challenge is to maintain margins in a context of high energy costs and a eventual slowdown of European tourism. In the short term, the flow of travelers supports the bullish thesis, but the pressure to increase investments in sustainability could require more financing in the coming years.

ACS

ACS closes the group of companies that combine value and risk. The conglomerate chaired by Florentino Pérez continues to be an international benchmark in construction and infrastructure. Without knowing the results for the first nine months of the year, in the first half it recorded a net profit of 450 million, 81% more than the previous year, driven by its business in North America.

Despite this, the company maintains a net debt of around 2,200 million, with a significant part linked to concessional projects. Exposure to higher interest rates and public investment cycles in the United States and Europe are variables to monitor. His PER is around 22 timeshigh if we compare it with 10 times, which is the average multiple for the sector in Europe.

The set of these cases reflects a pattern that is repeated in a good part of the Ibex. Low multiples are not always a sign of a bargain, they are often a reflection of a risk premium that the market demands to compensate the uncertainty. In an environment of lower liquidity and moderate growth, debt is once again the great divider between what seems cheap and what really is. Companies with tighter balance sheets are the ones that will suffer if financing costs remain high or if the global cycle cools earlier than expected.