Edenor (EDN)

By both methods, the value today (DCF $76 · Multiples $36) exceeds the market price ($25).

Today — fairly valued: at $25 trades ~31.1% below its value discounted to today (~$36); the discount is positive but does not reach the margin of safety we require (≥38%).

At 5 years — Infravalorado: the target price ($44) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$22.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($25) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-16.5%/year) than we project (4.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~ARS 85.9 bn of owner earnings in year 5 (vs ~ARS 258.1 bn of our base case). It recalculates if the DCF assumptions are edited.

A regulated utility is valued on P/E over adjusted earnings (equity-level): the value sits in the regulated base (rate base), which grows with capex at an allowed ROE. GAAP can be depressed by the mark-to-market of hedges → the adjusted figure is used. It returns capital via dividend (a dividend aristocrat); it may issue some equity to fund capex. Total return adds the dividend collected along the way. In edit mode, the metric, shares, dividend, and exit multiple can be adjusted.

Currency and unit. The entire fundamental apparatus is in billions of December 2025 pesos, the issuer's reporting currency under the IAS 29 inflation adjustment. The stock trades in New York in dollars through a certificate representing twenty Class B ordinary shares, so the model's count is 43.75 million certificates: 906,455,100 shares issued minus 30,772,779 in treasury gives 875.0 million ordinaries, a figure the fiscal year itself corroborates by backing out the reported basic earnings per share of P$273.41 on a result of 239,236. The conversion to dollars happens once, at the close of the cascade, with the certificate's implicit exchange rate. A consequence that is disclosed: the model measures real returns in December 2025 pesos and the price is today's nominal, so the gap between Argentine inflation and peso depreciation since that cutoff is not captured in the conversion. Base year, and why it is the fiscal year rather than a twelve-month window. The base year is the fiscal year closed December 31, 2025. Under IAS 29 each presentation restates its series to the currency of its own closing date, so fiscal year 2025, in December 2025 pesos, and the first half of 2026, in June 2026 pesos, are in different units, and chaining them would mix two currencies. The annual-reporter convention therefore governs. The path is read from the income statement of the 2025 annual report, where the issuer already homogenized the three fiscal years: revenue of 2,008,401 in 2023, 2,687,708 in 2024, and 2,990,891 in 2025. Fiscal year 2022 comes from an earlier presentation, in a different restatement currency, and so does not enter the series: chaining it would produce a unit artifact rather than a growth rate. The net income line was read from the filing. The taxonomy's concept for income attributable to the parent's owners is a full year stale: its last fact is dated December 31, 2024 against a core closed December 31, 2025. It is not substituted with a neighboring concept, because income before tax is not the operating figure. The line was taken from the income statement of the annual report: net income for the year of 239,236 in 2025, with operating income of 143,139 against 55,346 in 2024 and an operating loss of 343,145 in 2023. Normalizing the base year, the decision that governs the entire model. The reported result of 239,236 carries a one-time gain of 218,114 from the Obligations Regularization Agreement, that is, the recognition of the payment plans for the debt with the wholesale market administrator under Decree 186/2025 and the minutes of May 21, 2025. It was zero in 2024 and 566,432 in 2023, so it is not recurring. Also, under IAS 29 the nominal financial result of −377,238 carries inside it the inflation compensation that the monetary position result of +307,317 returns: the two lines are read together and the year's real financial cost is 69,921. Normalized income before tax stands at 73,218, which is operating income of 143,139 minus that real financial cost. The rate applied is the 35% statutory rate the filing itself discloses, and not the 17.9% effective rate, because that effective rate is a monetary artifact: the tax reconciliation shows +141,911 from the monetary position result and −95,566 from the inflation tax adjustment, two items that offset each other and shrink with disinflation, to the point that in 2024 the net was a gain of +103,724 and in 2023 the effective rate was 51.8%. Normalized base-year earnings are then 47,592. The year-one path and why it jumps. Fiscal year 2025 covers only eight months of the new tariff schedule, and those eight months were also ramping up. Year one's anchor is not the trend but what the company has already reported: first-half 2026 operating income was 163,163 in December 2025 pesos, against 39,067 for the same half of 2025, that is 4.2 times, and that half alone already exceeds all of fiscal year 2025. The 1.1685 restatement factor was derived from two figures published at the same cutoff in the two presentations: equity as of December 31, 2025 is reported as 2,597,380 in the interim report and as 2,222,906 in the annual report, and total assets corroborate it to the fourth decimal, 6,729,603 over 5,759,383. The second half of 2025, by difference, was 104,072. The base case carries operating income to 330 in year one, which is the reported half annualized, and grows from there with the tariff framework. That valley-and-recovery shape is disclosed and has a verifiable name, so the deceleration rule's rebound exception is invoked: the year-one step is the base normalizing, not an acceleration of the business. The tariff framework, which is the path. Regulator Resolution 237/2025, of April 3, 2025, approved a real, after-tax return on assets of 6.50%, equivalent to 9.99% real before tax. Resolution 304/2025, amended by 441/2025, approved the tariff schedule for the 2025-2030 five-year period with an initial 3% increase in the distributor's own cost from May 1, 2025, a monthly real increase of 0.42% from June 1, 2025 through November 1, 2027, monthly indexation by retail and wholesale price indices, and an efficiency factor. That 0.42% monthly increase compounds to around 13% real on the distributor's own cost over thirty months, of which thirteen had already elapsed by the close of the reported half. That is why base-case operating income keeps growing strongly in year two, 356, and then decelerates to 367, 376, and 385 in years three through five: once the November 2027 window ends, only indexation, volume growth, and the inclusion of investment in the capital base until the next review remain. Real financial cost is modeled between 72 and 82, just above the fiscal year's real level, because the global notes program was expanded to US$1.7 billion at the July 27, 2026 shareholders' meeting and investment continues to exceed depreciation. The adverse and favorable scenarios vary the speed of the business, not the capital policy. The adverse case assumes the real monthly increase is suspended and indexation runs behind inflation, with operating income falling in real terms from 315 to 268 over five years: it is the concrete regulatory and political risk, with the regulator's intervention extended by Decree 370/2025 through July 9, 2026 and the new energy framework of Decrees 450, 451 and 452 of 2025 opening a two-year transition period. The favorable case assumes the framework holds, volume tracks the economic recovery, and network losses of 15.7% converge toward the 10% recognized in the tariff, with operating income reaching 450. The exit multiple moves between 12 and 17.5 times, with the base case at 15.5, near the floor of the regulated-utility archetype band: the business grows little in real terms once the tariff window closes and the authorized return is below the 10% bar by regulatory construction. The certificate path is a single one for all three scenarios and is flat: the company neither buys back nor issues, the ordinary share count is identical over the last four fiscal years, and the treasury shares are already netted out. It has paid no dividend since August 14, 2001, so the dividend series is zero across all three scenarios and the excess is retained: equity compounds with retained earnings and funds investment, which in 2025 was 368,467 against depreciation of 203,273. That is why the real return on equity falls toward the end of the horizon even as earnings grow. Maintenance capex is taken equal to depreciation under the Greenwald criterion: with revenue growing 11.3% in real terms, the excess of investment over depreciation is buying expansion of the capital base rather than replacement, so the split between the two is not the mute shortcut. The change in working capital is taken at zero and disclosed: under IAS 29 the cash flow statement mixes monetary restatement with operating movement, and there is no clean variation to isolate.

Today's multiple compresses on its own going forward as the metric per share grows. The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—. Total return adds the dividend collected; the required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $44 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $25, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $44 in 5 years and a required return of 4.5% annually, the maximum to pay today is $36. Against the current market price ($25), the margin of safety is 31.1% (trades below the maximum → there is margin) and the total return at that price would be 12.6% annually.

• Metric and multiple. Multiple on normalized earnings, the method for the regulated-utility archetype. The base case applies 15.5 times, near the floor of the fifteen-to-eighteen band, on P$197,000 million at year five.
• Normalized base. Base-year earnings exclude the P$218,114 million one-time gain from the Obligations Regularization Agreement and read the financial cost together with the monetary position result: P$47,592 million against the reported P$239,236 million.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✕ ROIC exceeds the cost of capital (~10%)
• ✓ CFROIC backs up the ROIC (100%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Predictable cash generation. Operating cash flow was 204,744, 323,500 and 192,036 over the last three fiscal years: irregular, because the restructuring of trade payables with the wholesale market administrator and monetary restatement distort the year-over-year comparison.
• Return on capital. Below the 10% bar by regulatory construction: the regulator authorizes a real, after-tax return on assets of 6.50%. The real return on equity for the normalized fiscal year is 2.1%, and the current run rate is closer to 7% with the tariff schedule in steady state.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

The engine of a regulated distributor is volume distributed times the distribution value-added the regulator recognizes. Volume grows little and tracks economic activity: 22,951 GWh in 2025 on a wholesale market share stable over a decade. What moves is the regulated margin, and its path is dated in Resolution 304/2025: an initial +3% from May 1, 2025 and +0.42% monthly in real terms through November 1, 2027, with monthly indexation via a formula of 33% consumer price index and 67% wholesale price index, and an efficiency factor. Investment of P$368,467 million against depreciation of P$203,273 million expands the capital base on which the authorized return is calculated, which is added with a one-year lag. The third lever, specific to this market, is the reduction of network losses.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (31-dic-2025): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Reinvestment runway. It exists and is recognized: investments are added to the capital base with a one-year lag through the quality factor, so reinvestment generates a regulated return. But that authorized return is 6.50% real after tax, below the 10% bar.
• Volume growth. Low and tied to economic activity: 22,951 GWh sold in 2025 on a wholesale market share stable over a decade. Growth in earnings comes from the tariff, not from volume.

• Relevant in ten years. Electricity distribution in a metropolitan area of nine million residents is about as recurring a demand as exists, and the concession expires in 2087. Predictability of the service is at its maximum; predictability of the margin depends on the regulator.
• Pricing power. It is not set by the company: the regulator approves the tariff. The current schedule includes monthly indexation by price indices and a real increase through November 2027, but the precedent from the prior decade shows that mechanism can be suspended.
• Operating leverage. High: the purchase of energy is a pass-through and the rest of the cost structure is largely fixed, so each point of real tariff falls almost entirely to operating income. That is why the result went from a loss of 343,145 in 2023 to 143,139 in 2025 while revenue grew far less.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✕Value creation (earned ROE − 10% bar)-7.9pp
• ✓Leverage (net debt / EBITDA)1.2x
• ✓Predictability (% regulated + rate-base growth)100% regulated

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Net debt of P$411,444 million, 1.19 times income before depreciation, and equity at 38.6% of assets. Well below the 3-times threshold that would trigger the negative debt covenants that condition dividend distribution.
• Debt currency. The company states it cannot fully hedge its currency risk, against foreign-currency obligations and a global program expanded to US$1.7 billion. The peso depreciated 30% in real terms during 2025.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Capital allocation. All excess is retained and reinvested in the network: P$368,467 million of investment in 2025 against depreciation of P$203,273 million. No dividend since 2001 and no buyback. The discipline is consistent with a business that needs to expand its regulated capital base.
• Alignment and transparency. Control rests with Edelcos, with the entirety of the Class A shares, 51% of capital, pledged to the government as security for the concession. The 20-F publishes aggregate compensation for the board, the statutory auditors' committee and senior management; what is not available, because the issuer is foreign and does not file a proxy statement, is the per-person breakdown and individual holdings, and that is disclosed as a gap.

• Missing buyers by jurisdiction: this is a regulated Argentine distributor that trades in New York through a certificate, with exchange controls in force that limit dividend remittance. The universe of institutional buyers that can take on that risk is narrow, and that narrowness does not depend on the business being broken.
• The price prices in the memory of the prior regime: between 2017 and 2025 the tariff was decoupled from costs and operating income was negative in 2022 and 2023. The market discounts that pattern repeating, and the 2025-2030 five-year tariff schedule has been in force for just sixteen months.
• Reported fiscal year understates earning power for a mechanical and dated reason: the review took effect on May 1, 2025, so the accounting year covers eight months of the new schedule. A reader who annualizes the fiscal year's operating income understates the current level by more than half, and that is a gap between perception and reality that resolves itself simply with the passage of the calendar.
• The statements are restated under IAS 29, which makes the series from different presentations incomparable to each other and discourages mechanical reading: the same revenue reported by two consecutive presentations can differ by a third from restatement alone.

Subsequent events after the fiscal year close are disclosed: the interim report of August 11, 2026 confirms that the monthly tariff adjustment was applied without interruption during the first eight months of 2026 and reports half-year operating income that exceeds that of the full fiscal year, the shareholders' meeting of April 29, 2026 approved the allocation of the result without distributing it, that of July 27, 2026 expanded the global notes program to US$1.7 billion, and on July 23, 2026 the company submitted, together with Andina Energies PLC, an irrevocable offer to YPF for 70% of Metrogas and 5% of MetroEnergía, whose acceptance and consummation the filing itself declares uncertain. The source of the discount is identifiable and positive, not an absence of explanation: it is the narrowness of the buyer universe and the lag between the reported fiscal year and the tariff schedule now in force. What the discount also rightly charges is that the framework can be reversed.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at -3%/year (-15% total): the margin of safety protects the downside. The bull (+20%/year, +152% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Reversal of the tariff framework. The central risk, with direct precedent: between 2017 and 2025 the tariff was decoupled from costs. The current schedule is sixteen months old; the regulator's intervention concluded in May 2026 with the new National Gas and Electricity Regulatory Entity (ENReGE), which now sets the tariff schedules.
• New energy framework. Decrees 450, 451 and 452 of 2025 opened a two-year transition period toward a scheme that would allow direct energy sales to users; the implementing regulations are still in progress.
• Concession and control. The entirety of the Class A shares, 51% of capital, is pledged to the government as security for the concession, and at the close of each management period it must be put out to international tender, with the controlling shareholder holding the right to match the best bid.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: ROE 2% does not clear the 10% bar (regulated return by design).

• Peter Lynch Growth at a reasonable price (GARP)

  A stalwart, growing 4% — no conclusive multiple/growth to judge the price.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Not applicable — the Magic Formula excludes financials and regulated businesses (EBIT/EV does not capture the operating leverage).

• Howard Marks Perception vs reality + cycle

  The price discounts -17% vs our 4%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor -3%/yr, bull-scenario ceiling +20%/yr over 5y: reasonable asymmetry, without an ample cushion.

• Pat Dorsey Moat strength (Five Rules)

  A wide moat, stable; sources: intangibles, efficient scale, switching costs, cost advantage → passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -17%, within what we project (4%) — the story squares with the numbers.