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How Top Utility Stocks Are Currently Valued

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Valuation

Currently, NextEra Energy (NEE), the top rallied stock among utility giants, is trading at an EV[1. enterprise value]-to-EBITDA multiple of ~16x. That’s higher than its five-year average valuation. It’s trading at a PE multiple of 14x.

Southern Company (SO) stock is trading at an EV-to-EBITDA multiple of 10.8x, which is lower than its five-year average. Duke Energy (DUK) is trading at an EV-to-EBITDA multiple of 11.0x, which is close to its historical average. It has a PE multiple of 21.0x.

XLU stk

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The laggards

Dominion Energy (D) is one of the laggards among the utilities this year. It has fallen ~11% year-to-date. Currently, it’s trading at an EV-to-EBITDA multiple of 14.0x, while its PE multiple is 22.0x.

As we’ve already seen, utilities (XLU) have had a tepid run so far this year, largely due to strength in Treasury yields. Softness in these defensives could continue, given Jamie Dimon’s last week’s forecast of benchmark yields reaching 5% or higher. For more information, be sure to read Utilities: What If Jamie Dimon’s Forecast Comes True?

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