Sempra Energy (SRE), the largest utility by market cap in California, is trading at a forward PE ratio above 18x based on the EPS estimates for 2019. Sempra Energy is one of the fastest-growing utilities (XLU). Analysts expect more than 10% YoY EPS growth for Sempra Energy in 2019. The company’s five-year average historical valuation is ~20x, while peers’ average forward valuation is ~17x. Sempra Energy stock looks to be trading at a slight premium compared to its peers. Sempra Energy stock seems to be trading at a discount compared to the historical average. Sempra Energy’s higher EPS growth likely justifies the premium valuation.
FirstEnergy (FE), one of the top gainers among utilities last year, is trading at a forward PE ratio of 15x, which is lower than peers’ average. Since FirstEnergy separated from its competitive business last year, its earnings are expected to stabilize. Regulated operations offer earnings stability and predictability. FirstEnergy stock’s valuation is lower than its historical average and peers’ average. FirstEnergy offers a dividend yield of 4%, which is higher than its peers. Read How FirstEnergy’s Dividend Yield Compares with Peers’ to learn more.
Currently, independent power producer NRG Energy (NRG) stock is trading at a forward PE ratio of 8.6x based on analysts’ projected EPS for the next 12 months. NRG Energy stock looks to have an attractive valuation due to its lower forward PE ratio compared to peers’ average. NRG Energy appears to be trading at an alluring valuation considering the company’s higher potential EPS growth in 2019.