In the energy-services business, Enron competes with a whole host of players, including consultants, regional utilities and energy outsourcers, but none have Enron's geographic scope. It's a challenge to value Enron's stock, because it's such a hybrid. It always seems expensive, but it continues to outperform expectations. They also typically value the company's businesses in terms of EBIT, judging that to be a more consistent way to evaluate Enron's income because its businesses are so capital intensive. And wholesale energy's EBIT growth is likely to exceed 30 percent annually for at least the next five years on the strength of further deregulation of global energy markets.
Analysts are more cautious.
Most agree that wholesale energy deserves a higher premium than the market is currently willing to pay, but bandwidth is still a couple of years away from profitability. In the meantime, Salomon Smith Barney analyst Ray Niles suggests that investors focus on the market potential of bandwidth trading, and that the quick acceptance of this product in the market could mirror the steady early growth of electricity trading in the mid-1990s. Niles thinks Enron's overall energy operations alone are worth more than Enron's current share price. Ultimately, many investors will look at plain old earnings per share. Social Responsibility Enron has won awards each of the past three years for its efforts to reduce methane emissions and has been applauded for its wind-power division.