Is Exelon Trading at a Discount Compared to Its Peers?

Rabindra Samanta - Author

Sep. 27 2018, Updated 1:35 p.m. ET

Exelon’s EV-to-EBITDA multiple

Exelon’s (EXC) EV-to-EBITDA (enterprise value-to-EBITDA) multiple is 7.57x. The five-year average EV-to-EBITDA multiple for EXC is 7.35x. Currently, EXC is trading at a small premium to its historical average.

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Exelon is trading at a lower EV-to-EBITDA than its peers

Compared to its peers, Exelon has a low EV-to-EBITDA multiple. Entergy Corporation (ETR), AES Corporation (AES), PPL Corporation (PPL), and NextEra Energy (NEE) have EV-to-EBITDA multiples of 8.5x, 8.6x, 9.8x, and 16x, respectively. The graph above shows the EV-to-EBITDA multiples of these stocks. A lower multiple might indicate undervaluation in a stock.

Forward EV-to-EBITDA

EXC’s forward EV-to-EBITDA multiple is 8.9x. The forward EV-to-EBITDA multiples for Entergy Corporation (ETR), AES Corporation (AES), PPL Corporation (PPL), and NextEra Energy (NEE) are 8.9x, 7.7x, 12x, and 9.5x, respectively, so EXC’s forward multiple is either on par with or lower than those of most of its peers.

NEE makes up ~11.5% of the Utilities Select Sector SPDR ETF (XLU) and has the highest weight of any utility stock in the fund. In the next article, we’ll discuss EXC’s dividend yield. EXC makes up ~6% of XLU.


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