Wondering if Iberdrola is a bargain or looking expensive these days? You are not alone, and it is time to dig into what really drives the value behind the stock.
The share price has had a strong run this year, up 32.5% year-to-date and 39.0% over the last 12 months. There was a slight dip of 0.8% in the past week.
Recent headlines have been buzzing about Iberdrola’s expansion into offshore wind projects and new partnerships, pushing the company’s global reach. These strategic moves helped explain much of the recent upward momentum and have also refocused investors’ attention on the long-term growth story in renewable energy.
Despite all this excitement, Iberdrola currently scores a 0/6 on our valuation checks for being undervalued. This means it does not pass any of our six undervaluation tests. Next, we will cover the different ways the stock’s value can be assessed, but stick around for an even better approach to valuation at the end of the article.
Iberdrola scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and discounting them back to today’s terms. This approach helps gauge what the business is really worth, regardless of daily share price movements.
Iberdrola’s current Free Cash Flow stands at approximately €5.0 Billion. Analyst estimates cover the next several years, with projections indicating a notable decline in free cash flow over the coming decade. By 2028, discounted free cash flow is expected to be €1.7 Billion, and further extrapolations suggest a continued drop, reaching around €539 Million (discounted) by 2035. These declining figures are calculated in Euros, the company’s reporting currency.
Based on this DCF method, Iberdrola’s estimated intrinsic value is €3.50 per share. This is considerably lower than its current market price, and the model implies the stock is trading at a 413.8% premium to its fair value. This suggests that Iberdrola is substantially overvalued by this measure.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Iberdrola may be overvalued by 413.8%. Discover 922 undervalued stocks or create your own screener to find better value opportunities.
IBE Discounted Cash Flow as at Nov 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Iberdrola.
The Price-to-Earnings (PE) ratio is often a go-to valuation measure for profitable companies like Iberdrola, as it offers a simple way to assess whether the market price reflects current earnings power. A “fair” PE ratio varies from company to company and is typically shaped by factors such as expected earnings growth and business risk. Higher growth or lower risk usually leads to a higher reasonable PE, while companies with slower growth or more uncertainty tend to warrant lower multiples.
Iberdrola currently trades at a PE of 22.3x, which puts it well above the Electric Utilities industry average of 14.3x and the peer average of 13.7x. On the surface, this might suggest the stock is comparatively expensive. However, Simply Wall St’s proprietary “Fair Ratio” takes the analysis a step further. The Fair Ratio, calculated at 21.1x for Iberdrola, considers a deeper set of inputs including growth prospects, profit margins, market cap and risk profile, offering a more tailored benchmark than the standard industry or peer averages.
Given that Iberdrola’s current PE is only marginally above its Fair Ratio, the valuation now appears justified based on this method. The stock’s price is essentially in line with what would be expected based on the company’s specific fundamentals.
Result: ABOUT RIGHT
BME:IBE PE Ratio as at Nov 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1434 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, the smarter, more dynamic approach to investing.
A Narrative is more than just numbers. It is your story behind the stock, your unique way to combine forecasts for revenue, earnings, and margins to decide what you think the company is really worth. Narratives connect Iberdrola’s business outlook and risks directly to a financial forecast, and then all the way to a fair value that makes sense for you.
On Simply Wall St’s Community page, millions of investors are already using Narratives to track their thinking, compare Fair Value to market Price, and decide when to buy or sell. Narratives are updated automatically when key news or results land, so your decision-making is always informed by the latest facts and perspectives, not stale data.
For example, some investors see Iberdrola’s clean energy expansion and stable network investments driving growth, justifying a Fair Value as high as €18.5. Others focus on regulatory risks and project delays to argue it could be as low as €9.7. Your Narrative lets you side with the view and assumptions that feel right for you.
Do you think there’s more to the story for Iberdrola? Head over to our Community to see what others are saying!
BME:IBE Community Fair Values as at Nov 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include IBE.MC.
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