Origin Energy Earnings: Strong Result but Guidance Underwhelms

No-moat-rated Origin Energy’s recovery continued in fiscal 2024. Adjusted EBITDA increased 14% to AUD 3.53 billion, and underlying net profit after tax increased 58% to AUD 1.18 billion. EBITDA was close to our expectations, but NPAT was 6% below because of higher taxes and a weak performance from UK-based Octopus Energy. Overall, it was a good result, but fiscal 2025 guidance for the core utility business, known as Energy Markets, underwhelmed. We downgraded our Energy Markets EBITDA forecast by 15% to AUD 1.3 billion, which is near the middle of the guidance range. Our longer-term forecasts are largely unchanged, and we maintain our AUD 9 per share fair value estimate. Origin’s share price dropped 10% after releasing results and now appears fairly valued. It trades on a forecast fiscal 2025 P/E ratio of 12 and offers a yield of nearly 6% fully franked.