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The energy needs of industrialized countries are enormous – and are likely to increase significantly due to rapid progress in artificial intelligence. Many analysts agree on this. However, it remains unclear where this additional energy will come from.
Rubis (ISIN: FR0013269123) is positioned precisely in this area of tension between growing demand and the pressure to decarbonize: a French specialist in energy distribution and renewable power generation with a strong presence in the Caribbean, Africa and Europe.
Its main business – supplying companies and households with petrol, diesel or gas – is considered a transitional technology with limited future potential. Many investors also take a critical view of this: the stock is trading at a single-digit P/E ratio, but offers a double-digit dividend yield. Distributions have been paid reliably and even increased over the years – yet the stock has lost almost 40 percent of its value over the last five years.
Source: StocksGuide stock price
But there is hope: the company is now combining conventional energy supply with the development of sustainable energy sources. Investments are being made primarily in solar energy systems. This area is expected to grow significantly in the future. And despite a challenging market environment and cyclical influences, Rubis repeatedly manages to deliver solid results – an interesting profile for investors looking for stable returns and moderate growth. Analysts also see significant potential for a recovery in value. The dividend should remain high despite an expected decline. The following Rubis stock analysis will provide more information on the business model, the latest annual figures and the opportunities and risks.
Rubis is a French company that focuses on the storage, distribution and generation of energy. What makes the oil and chemical logistics specialist stand out is that its business model is based on two central segments: energy distribution (Energy Distribution) and the generation of renewable electricity (Renewable Electricity Production). The focus here is clearly on energy distribution, which accounts for 99 percent of the company's revenue of over 6.6 billion euros. By contrast, the renewable energy segment is still very young, but is growing dynamically and, above all, reflects the changes in energy demand due to climate change. This puts Rubis in a potential growth market and allows it to actively address disruptive threats. But first, a look at the individual segments
As already mentioned, energy distribution is Rubis' core business. It includes the distribution of liquefied petroleum gas (LPG), fuels (fuel) and lubricants (bitumen) to end users such as households, commercial customers, agriculture and industry. The core business is the distribution of fuels. With a volume share of 71 percent, it is dominant. It is also the growth driver, looking at the 2024 figures. The smaller bitumen business grew almost twice as fast, but with a revenue share of 7 percent, it is almost insignificant.
Source: Press Release FY 2024 Rubis
This is where the second segment, renewable electricity generation, comes in. It represents a new business area for Rubis, one that is becoming increasingly important in the wake of the energy transition. And the stock market is also celebrating the megatrend. What is Rubis doing here?
To cut a long story short, it is focusing on the development of solar projects, in particular through the joint venture Rubis Renouvelables with the French solar power producer Photosol, in which it acquired a majority stake in 2022. It is investing primarily in solar parks, mainly in France. But there are also expansion plans in other markets. The segment's revenues come mainly from the sale of electricity to national grids, often under feed-in contracts or direct marketing agreements with companies. In addition, Rubis uses its own infrastructure, such as the roofs of warehouses and service stations, to install solar panels, which in this context allows synergies between the two business areas. This allows Rubis to decarbonize its portfolio in the long term while also benefiting from the growing markets for renewable energies.
Whether the strategy is ultimately wise remains to be seen. After all, the renewable energy sector is dependent on subsidies in the big picture. Since many governments are currently providing generous funding here, a company like Rubis can benefit greatly. But there has not been much money to be made here so far. The figures confirm this. At the EBIT level, the division posted a loss of EUR 8 million in 2024. In the long term, however, this focus could well make sense, especially if the company also focuses its business more on providing electricity for cars. However, neither market is easy, as the following chapter will show.
The energy market, especially in the areas of energy distribution and renewable energies, is fundamentally characterized by dynamic changes. On the one hand, these are driven by technological innovations and geopolitical developments. On the other hand, they are driven by a growing awareness of environmental and climate issues. In particular, the transition from fossil fuels to renewable energies, driven by global climate targets and regulatory requirements, has significantly changed the competitive landscape in the energy industry. Yes, it can be considered a disruptive threat. Companies now have to develop both traditional business models in energy distribution and new sustainable business models for energy production from renewable sources such as solar and wind energy. This costs money initially, which can be particularly challenging for smaller providers such as Rubis.
Competition is also intense. Due to the volume market without entry barriers, there are a large number of players fighting hard for market share in different geographic regions. They compete in a variety of segments, including the liquefied petroleum gas, fuels, lubricants and electricity segments in which Rubis is active. The market leaders are, of course, large capitalized multinational companies that have an established infrastructure and an extensive distribution network. But there are also smaller, regionally active companies that serve markets through agility and specialization in certain niches. However, competition is characterized by price sensitivity and the need for long-term partnerships with industrial customers and consumers. Long-term supply contracts help to survive. The challenge, however, is that demand for traditional energy sources is declining in some regions. Regional companies like Rubis must therefore differentiate their offers and constantly focus on cost optimization and service quality in order to maintain their market position.
The market for renewable energies may initially appear different, especially for solar and wind power generation. It is growing rapidly, but is also becoming increasingly competitive. Here, too, it is a volume market with no barriers to market entry. The positive thing, however, is that this market is being boosted by international and national climate targets, government subsidies and tax incentives. However, if you look at Rubis's last annual report, this is still not enough. At segment level, a loss of 8 million euros was reported in 2024. Large multinational energy companies, which are increasingly diversifying their portfolios with renewable energies, are in competition with emerging companies that focus exclusively on the development of solar and wind farms. Competition in this area is not only about the price of the energy generated, but also about access to funding, permits and suitable locations for new projects. In addition, technological innovations and efficiency gains play a crucial role. And here, companies that are able to develop advanced storage technologies to compensate for the intermittent nature of renewable energies, or that develop innovative models for the direct marketing of solar power, can gain a competitive advantage. Access to capital for infrastructure expansion and project scaling is also an important competitive factor.
Source: StocksGuide charts for Rubis
Rubis' listed competitors in the fields of energy distribution and renewable energies include companies such as TotalEnergies, Royal Dutch Shell, BP and Eni. TotalEnergies, in particular, is a French global energy company active in the oil, gas and, increasingly, renewable energy sectors. The company has diversified extensively in the solar and wind energy sectors in particular, making it a direct competitor to Rubis. Royal Dutch Shell is in a similar position, operating in traditional energy distribution and in the generation of renewable energies. Like TotalEnergies, Shell is pursuing a diversification strategy and is particularly active worldwide in the fields of solar energy and electromobility. BP also has a similar focus and is also striving for a transformation towards more sustainable energy production, making it a direct competitor of Rubis in the areas of energy distribution and renewable energies. And the Italian company Eni is now also active in energy distribution, with both fossil fuels and renewable energy sources. Above all, it competes with Rubis, particularly in African markets. A performance comparison shows that Rubis stocks have significantly underperformed. The oil majors have advantages due to their oil production, strong cash flows and high capitalization.
In the field of renewable energy production, companies such as Iberdrola and NextEra Energy specialize in the production and distribution of electricity from renewable sources and are active in the markets in which Rubis is also trying to expand its position. They are leaders in the solar and wind energy sectors and represent increasing competition in the field of renewable energies.
acquisitions adorn the history of Rubis. In fact, several transactions have been carried out in recent years. In 2024, for example, Rubis sold its 55% stake in Rubis Terminal to the private equity firm I Squared Capital Advisors. Prior to that, in 2022, Rubis acquired the French solar power producer Photosol to expand its activities in the renewable energy sector. In 2019, Rubis took over KenolKobil, a leading distributor of oil products in East Africa, and Gulf Energy in Kenya in the same year. However, the strong focus on African countries not only offers opportunities, they also pose risks. Not only political, but also economic risks due to high inflation. In addition, goodwill is the largest balance sheet item at Rubis.
In 2024, Rubis was able to show a solid performance in line with the trend, although the company faced a number of challenges. For example, there were headwinds in Africa. By contrast, things went better in the Caribbean. Overall, sales at group level remained stable, with net profit falling only slightly to €342 million, in line with the guidance of €340 to 375 million. However, it should be noted that the decline is due to the exceptionally strong performance of the previous year.
Source: StocksGuide Income Statement
In addition, a dividend of €2.03 per stock has been proposed – on top of the additional interim dividend from 2024 of €0.75 already paid (due to the 55% sale of Rubis Terminal) – an increase of 2.5% compared to last year. This is the 29th consecutive year that Rubis has increased its dividend, making it one of the few dividend aristocrats in Europe. This is made possible, among other things, by the strong cash flows. Cash flow from operating activities increased by 18 percent to 574 million euros in 2024. At the same time, net debt remained stable at 1.4 times EBITDA, which once again underlines the solidity of Rubis' balance sheet. Total debt also decreased by 5 percent compared to the previous year.
After solid results in 2023 and 2024, Rubis also expects growth in the Caribbean to normalize in 2025, with a slightly lower growth rate. In Europe, on the other hand, the positive momentum in energy distribution will continue, according to management. Higher development costs in renewable power generation will initially weigh on EBITDA in 2025, but will enable future growth. However, borrowing costs are likely to rise due to the Photosol development. The aim is to build up a portfolio of more than 2.5 GWp (gigawatt peak) by 2027, which will generate a consolidated EBITDA of €50 to 55 million. In 2024, it was €29 million. By way of comparison, in terms of peak power, this corresponds to the output of almost two modern nuclear power plants in 2027.
In Africa, however, the economic situation remains unstable and performance depends on political and regulatory developments. For 2025, an EBITDA of between €710 million and €760 million is expected at the group level. Rubis pursues a disciplined capital allocation policy with a focus on maintenance investments, dividends and sustainable growth.
Source: StocksGuide Sales and Margin forecast
Analysts are also convinced that the upward trend will continue. However, no major leaps are to be expected. Specifically, they expect only low single-digit growth per year until the end of 2027. The earnings situation is not expected to improve significantly. On the contrary: analysts expect the EBITDA margin to fall by more than 1.5 percentage points over the next three years.
The dividend analysis for the Rubis stock is initially positive and makes the stock appear particularly interesting for income-oriented investors. With a total score of 15 out of a possible 15 points, Rubis is even one of the absolute top performers in the dividend strategy. The company thus offers a convincing combination of high returns, stable distributions and continuous growth. But now to the individual categories.
Source: StocksGuide dividend analysis
With a current dividend yield of 11 percent, Rubis achieves the highest score of three points in this category. However, this is explained by an additional interim dividend paid to shareholders in 2024 due to the 55% terminal stock sale. The high score is unlikely to be sustainable, as the dividend forecasts show. Nevertheless, high dividends should continue to flow. And the dividend stock is also convincing in the long-term comparison: over the last ten years, the average dividend yield was a solid 4.6 percent. Particularly noteworthy is that the payout ratio of the last three years is at a healthy 74 percent. It shows that Rubis passes on a significant portion of its profits to shareholders, but still retains sufficient funds. The free cash flow reveals more.
Source: StocksGuide dividend history
The valuation of the Rubis stock is moderate to favorable in the current market environment. With a price-earnings ratio (P/E TTM) of 8.2, the stock is well below the market average. The enterprise value to free cash flow (EV/FCF) ratio of 13 is also within an acceptable range. Historically, more has often been paid.
Source: StocksGuide Charts
It is also noticeable that the EV/free cash flow ratio is higher than the P/E ratio. If we look at the key figures for profit and free cash flow, which are used for the calculation, a few things become clear: for example, the free cash flow is regularly slightly lower than the net profit – an indication of certain investment needs or differences in working capital. In principle, this does not have to mean anything bad, but a full distribution would further increase the capital requirement.
Source: StocksGuide key metrics
Rubis is currently performing rather weakly in terms of sales growth. With an average growth of just 0.21 percent, no strong expansion dynamics can be identified. However, it should be noted that Rubis operates in a cyclical market. Business performance is heavily influenced by macroeconomic and geopolitical factors, as well as by commodity and energy prices. Such cycles often lead to fluctuations in sales and profits, which distorts purely static growth figures. In addition, acquisitions also lead to erratic changes in the revenue base, which need to be understood.
Source: StocksGuide revenue growth
Overall, the stock initially looks attractive from a valuation perspective, particularly in view of the low P/E ratio and high dividend yield. The low sales growth is put into perspective in the context of the cyclical industry. Those who feel comfortable in this environment and can withstand cyclical fluctuations will find that Rubis is a solidly valued stock with a defensive character and stable dividend policy. However, the low valuation could also be an expression of investors' fears. After all, Rubis faces a disruptive threat if only electric cars are driving on the streets at some point. A transformation of the business model is costly and particularly painful for smaller, regionally focused providers like Rubis. In addition, a not insignificant part of the business is generated in politically unstable markets, which increases opportunities and risk.
In my view, Rubis is a solid but often overlooked company that operates in a rather mundane but stable business. It combines classic energy distribution – in niche markets such as the Caribbean or parts of Africa – with an increasing focus on renewable energies. This alone does not make Rubis a dynamic growth stock, but it does make it a reliable cash flow supplier with a strategic view of the future.
What I personally like in particular is the long-term orientation of the management. The fact that the dividend has been rising continuously for almost three decades is a testament to financial discipline and shareholder-friendliness. The valuation also appears attractive at present: a P/E ratio of 7.5 and a double-digit dividend yield are rarely found in this quality. If they are (as is currently the case with Rubis), they could imply risks such as an impending dividend cut. The fact that free cash flow is regularly slightly below net profit is not a cause for concern for me, given the investments in the field of renewable energies, but rather a sign that Rubis is prepared to actively shape its future. Takeovers are part of that.
Of course, the French are exposed to cyclical influences, which is also reflected in stagnating sales growth. But I see this as a strength: Rubis is active in markets that are not always in focus, but which show stable demand, particularly in the area of basic energy supply. By contrast, I see the relative size as more problematic. With an enterprise value of around four billion euros, Rubis is not small, but it is a dwarf compared to the oil majors. These have recently performed significantly better than Rubis.
Source: Rubi target price
Nevertheless, analysts' assessments of Rubis are largely positive. 80 percent of the analysts evaluating the stock recommend buying it, while 20 percent recommend holding it. There are currently no sell recommendations, although the number of analysts is extremely low at five.
The average target price is 33.40 euros, well above the current price level of around 24.90 euros. A price potential of more than 34 percent shows that, from the analysts' point of view, Rubis could be undervalued and has considerable catch-up potential. The analysts therefore believe that the Rubis share is capable of an extremely positive price development despite cyclical influences, transformative risks and only moderate growth figures. A solid balance sheet, a stable dividend policy and the expansion of renewable activities seem to be important arguments for this optimistic assessment. But in the long term, I personally would feel better off with larger players in these markets.
The author and/or persons or companies associated with the StocksGuide own or may own stocks in Rubis.
This post represents an expression of opinion and not investment advice. Please note the legal information.