Dominion’s EV-to-EBITDA multiple
Dominion Energy’s (D) EV-to-EBITDA (enterprise value-to-EBITDA) multiple is 14.05x, and its five-year average EV-to-EBITDA multiple is 14.11x. Currently, Dominion is trading at a small discount to its historical average.
A higher EV-to-EBITDA multiple than its peers
Dominion Energy has a higher EV-to-EBITDA multiple than most of its peers. American Electric Power Company (AEP), Duke Energy (DUK), Public Service Enterprise Group (PEG), and NextEra Energy (NEE) have EV-to-EBITDA multiples of 10.9x, 11x, 11.4x, and 16.2x, respectively. The graph above shows the EV-to-EBITDA multiples of these stocks. A higher multiple might indicate overvaluation in a stock.
Dominion’s forward EV-to-EBITDA multiple is 11.9x. The forward EV-to-EBITDA multiples of American Electric Power Company, Public Service Enterprise Group, and NextEra Energy are 10.5x, 10.5x, and 11.9x, respectively, so Dominion’s forward multiple is either on par with or higher than those 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 Dominion’s dividend yield. Dominion Energy makes up ~6.6% of XLU.