Exelon Corporation (EXC) stock has been rallying over the last few trading sessions, and it hit a 52-week high of $37.76 on July 21, 2017. It’s currently trading near its previous year’s levels, largely tracking the Utilities Select Sector SPDR ETF (XLU). The SPDR S&P 500 ETF (SPX-INDEX) (SPY) has surged more than 13% in this period.
In comparison, FirstEnergy (FE) stock has fallen more than 13%, while regulated utility giant Southern Company (SO) has fallen nearly the same in the last year. NextEra Energy (NEE) has risen 12% in the period.
Hybrid utilities stocks are a few of XLU’s stocks that are currently trading at relative discounts. Exelon, the largest of all, is currently trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 7.5x, compared to its five-year historical average multiple of 8x. Exelon stock appears to be trading at a discount compared to even the industry average of 10x.
Ohio-based FirstEnergy (FE) is currently trading at a valuation of 8.5x. Its historical average is near 10x.
In comparison, regulated utility giant NextEra Energy (NEE) is trading at a valuation of 13x, and Southern Company (SO) is trading near 12x. Hybrid utility stocks are relatively more volatile likely due to their volatile earnings, which may have led to their discounted valuations.
Dividends form an important part of utility investors’ returns. Exelon’s returns last year came in at 6.4%, and FirstEnergy’s returns came in at -8%. In comparison, XLU returned 6% in the same period.
You can compare the top utility stocks in Market Realist’s series Utility Stocks: Your Who’s Who to see who offers a better investment proposition.
Next, let’s discuss where Exelon stock could go in the short term.