In April 2018 both banks and utilities had practically the same PER, around 12.5. Since then there has been an extreme relative movement between them, with electricity companies getting more expensive and banks cheaper, analysts at M&G Valores point out.
Utilities in Europe have made a sudden stock market comeback since late July, after performing well in May, underpinned by strong Q1 earnings and some speculation about possible further consolidation in the industry. Q2 results have also been solid and fuelled earnings upgrades.
The main European electricity companies will invest nearly €85 billion over the next four years to speed up their strategic transformation to enable them to deal with the foreseeable drop in coal and gas prices. The companies plan to turn their strategies around, focusing more on renewable energies, networks and regulated activities.