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Are These Top Utilities Trading at Discounted Valuations?

Vineet Kulkarni - Author

Aug. 18 2020, Updated 5:27 a.m. ET


Many utility stocks have corrected in the last six months after peaking in November 2017. From a valuation perspective, some of the top utility stocks (XLU) are looking very attractively valued.

Dominion Energy (D) stock appears to be trading at a largely discounted valuation to its historical PE (price-to-earnings ratio). Dominion Energy stock is trading at a PE of 20x, while its five-year average PE is ~24x. It’s trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 13.0x, while its historical average is beyond ~14x. Thus, the stock appears to be trading at a cheaper valuation than its historical average EV-to-EBITDA.

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Southern Company

Southern Company stock is trading at an EV-to-EBITDA multiple of 10.2x. The company’s five-year historical valuation average is near 11.0x. As a result, the stock appears to be trading at a discount to its historical average.

Currently, Duke Energy (DUK) stock is trading at a PE of 22.0x. Duke Energy’s five-year historical average valuation is ~21x. Consequently, the stock appears to be trading at a premium to its historical valuation. Its EV-to-EBITDA multiple is 10.6x compared to its five-year historical average of 11.0x. Thus, Duke Energy stock seems to be trading at a discount to its historical average given its EV-to-EBITDA valuation.

Check out all the data we have added to our quote pages. Now you can get a valuation snapshot, earnings and revenue estimates, and historical data as well as dividend info. Take a look!


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