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Exelon Stock’s Current Valuation: What You Need to Know

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Mar. 9 2018, Updated 7:31 a.m. ET

Valuation

Exelon Corporation (EXC) is currently trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) valuation multiple below 8.0x. Its five-year historical average valuation is near 7.0x. EXC looks to be trading at a significant discount compared to its peers’ (XLU) average of 11.0x. However, it looks to be trading at a premium to its historical average.

Exelon’s peer FirstEnergy (FE) is trading at an EV-to-EBITDA ratio of 8.5x, while Entergy (ETR) has a valuation multiple near 12.0x.

Exelon stock seems to be trading at a discount to peers, considering its PE multiple of 9.4x.

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Utilities such as Exelon and FirstEnergy have a large exposure to competitive operations. The volatile earnings from these competitive operations make their earnings less stable. Consequently, the discounted valuation relative to their peers is most likely due to volatile stock movements, driven largely by volatile earnings.

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