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Has Duke Energy Stock Turned Cheap after Its Recent Fall?

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Valuation

Top-regulated utility Duke Energy’s (DUK) correction has made it relatively cheap in the last month. However, it still seems to be trading at a premium to both its historical average and its peer average. It’s currently trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 11.4x. Its five-year historical average valuation is near 10.7x, while the industry average is also near this level.

Large-cap utilities such as NextEra Energy (NEE) and Dominion Energy (D) are trading at large premiums compared to their historical average valuations and the industry average.

DUK stk

The chart above shows Duke Energy’s movements over the last year along with the movements of the broader utilities and broader markets.

Duke Energy stock is currently trading at a PE (price-to-earnings) multiple of 20x, higher than the industry average PE multiple of ~16x. NextEra Energy is currently trading at a PE multiple of 18x, while Dominion’s PE multiple is ~22x.

You can compare top utilities’ (XLU) performances and see how they’re positioned for 2018 in Market Realist’s NEE, DUK, D, and SO: How Have the Top Utilities Fared This Year?

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