Stock of the Week: Eni

Italian oil giant's shares are undervalued, according to Morningstar analysis, but the company faces many challenges as it tries to go net zero by 2050

James Gard 16 July, 2021 | 10:43AM
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Stock of the week post-it

After Italy won the Euro 2020 football championship, our stock of the week poll has an Italian theme. In a Twitter version of a penalty shootout, our followers have put oil company Eni (ENI) in the back of the net, but sent former stock of the week Enel wide of the post.

Like all major oil companies, Eni is facing up the existential threat of the low carbon transition, and like rival Royal Dutch Shell (RDSB) has pledged to go “net zero” by 2050. And like Shell, Morningstar analysts think Eni’s shares are undervalued and the company has no economic moat due to the challenges of the oil and gas industry in the coming decades. Our analysts think that the Italian government’s majority stake in the business could weigh on shareholder returns in the future.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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James Gard  is content editor for Morningstar.co.uk