Iberdrola, EDF, Endesa outperform European utility peers in October

Among a select group of 20 European utilities and power producers covered by S&P Global Market Intelligence, all companies except one posted positive stock returns in October, with three recording double-digit gains.

Energy stocks enjoyed a rally in October as natural gas and crude oil futures reached multiyear highs. European utility CEOs welcomed moves by the European Commission to tackle power and gas price surges but urged energy ministers in EU member states to intervene without jeopardizing market integrity.

Spanish utility Iberdrola SA posted the largest positive return of 17.6% in October. The company revealed plans Oct. 19 to invest £6 billion in offshore wind farms through ScottishPower Renewable Energy Ltd.'s hub off the east coast of England, its largest project investment globally. Later in the month, Citi assessed Iberdrola as well-positioned to benefit from increasing expectations in long-term energy prices, upgrading the stock to buy from neutral.

Iberdrola was followed by Electricité de France SA, which recorded a gain of 16.9% for the month. The French utility submitted an offer to the Polish government to build up to 9.9 GW of nuclear reactors in the country, while its U.K.-based electric vehicle charging subsidiary, Pod Point Holding Ltd., revealed plans to list on the main market of the London Stock Exchange. Additionally, a subsidiary of Malaysian utility Tenaga Nasional Bhd. on Oct. 20 announced a deal to buy a 49% stake in EDF's Blyth offshore demonstrator wind farm in the U.K.

Other companies with positive returns for the month included Endesa SA, which saw its total return jump 14.5%, RWE AG with a return of 8.9% and Enel SpA with a gain of 8.8%.

Finnish utility Fortum Oyj was the only company within the group to post a negative stock return of 2.2% for October. During the month, subsidiary Uniper SE said it is pivoting its engineering business away from conventional generation through wide-ranging organizational changes and job cuts. The German subsidiary also recorded a major negative effect from changes of fair values of non-hedge-accounted derivatives, which the company warned will have a significant impact on Fortum's financial results as Uniper is its largest reporting segment.