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How Calpine Stock Is Valued Compared to Its Peers


Dec. 4 2020, Updated 10:53 a.m. ET

Calpine’s valuation

In this part of the series, we’ll see how Calpine (CPN) stock is valued compared to its peers. On March 27, 2017, CPN stock was trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) valuation multiple of 10.0x. US utilities’ (XLU) average multiple is just above 10.0x.

An EV-to-EBITDA ratio provides a comparative idea of a company’s valuation, regardless of its capital structure. EV is the combination of a company’s market capitalization and debt minus its cash holdings.

In comparison, NRG Energy (NRG) and Dynegy (DYN) are currently trading at an EV-to-EBITDA valuation multiple near 10.0x and 9.0x, respectively. Both companies seem to be trading at a fair valuation compared to the industry average.

When it disclosed its stake in NRG Energy, Elliott Management claimed that NRG is “deeply undervalued.” For more information, please read Is NRG Energy Really Deeply Undervalued?

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