Americas: The YTD return of the EY Americas Utilities Index was 3.4%, which is significantly lower than the regional market (as benchmarked by the S&P 500 index), which has been steadily increasing since mid-March, returning a YTD TSR value of 11.3%. The QTD returns for utilities in the Americas were also significantly lower than the overall market.
Europe: The YTD TSR of the EY European Utilities Index was 8.9%, which is significantly higher than the YTD TSR for the European benchmark index STOXX Europe 600, which performed poorly, returning a mere -1.8% for the year. The utilities index followed the market until the end of April, when the STOXX Europe 600 began to decline and the utilities index started to steadily rise. Utilities also outperformed the index for the quarter, returning 3.1%, compared with the benchmark value of 1%.
Asia-Pacific: The EY Asia-Pacific Utilities Index performed significantly worse than the Nikkei 225, the Asia-Pacific regional benchmark index. Asia-Pacific utilities returned -1.8% YTD compared with the market at 4.2%. The QTD and YTD returns of the EY Asia-Pacific Utilities Index were also significantly lower than the returns from other regional EY utilities indices.
For each regional segment, we examined the TSR and the EV/FY2 EBITDA values.
Americas: Generation achieved the highest TSR of the region, and was the only segment to outperform the market. Medium and small market capitalization integrated assets TSR performed the worst. The TSR of the water and wastewater segment performed better than in other regions.
The Americas utilities EV/FY2 EBITDA (enterprise value by next 12 months’ earnings before interest, tax, depreciation and amortization) multiple traded at a discount when compared with the Q2 average of 9.7x. Water and wastewater assets traded higher than the forward multiple of this asset across other geographies.
Europe: Generation achieved the highest QTD TSR in the region, while the water and wastewater segment TSR performed the worst. The TSR of the large market capitalization integrated segment performed better than in other regions.
The European utilities sector traded at the lowest EV/FY2 EBITDA multiple during Q3, and renewables traded the highest of all asset classes in Europe and recorded the highest performance for renewables across all regions.
Asia-Pacific: Gas utilities achieved the best YTD TSR in the region, and was the only segment to outperform the market. The renewables segment TSR was the worst result of the region, and also represented the poorest performance for this segment across all regions. The TSR of the medium and small market capitalization integrated segment outperformed other regions.
The Asia-Pacific utilities sector EV/FY2 EBITDA traded highest across all geographies and slightly higher than in Q2.