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FE, AEP, and EXC: Analyzing Utilities’ Current Valuation

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Mar. 4 2019, Published 2:59 p.m. ET

Valuation

FirstEnergy (FE) stock looks to be trading at an attractive valuation, considering its lower valuation multiple against its historical average and peers’ averages. FirstEnergy’s forward PE multiple is 16x, based on analysts’ 2019 EPS estimate. The company’s five-year historical average is ~17x. Utilities at large trade at an average valuation of ~18x.

FirstEnergy’s earnings and dividends will likely stabilize further in the coming quarters, given its increased focus on regulated operations. The stock has risen more than 25% in the last 12 months.

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America Electric Power

American Electric Power (AEP) stock is trading at a forward PE ratio of 19.4x, based on analysts’ earnings estimates for the next 12 months. AEP’s five-year historical average valuation is close to 17x. American Electric Power appears to be trading at a premium valuation compared to its peers as well as its historical average. AEP stock is up 25% in the last 12 months.

Exelon

Exelon (EXC) stock is trading at a forward PE ratio of 15.4x, which is lower than many peers’ averages and its five-year average of ~17x. Exelon reported solid earnings growth in 2018. The stock has soared ~32% in the last 12 months.

If you want to read about how top utility (XLU)(IDU) stocks stood recently in terms of valuations, check out how the biggest utilities are currently valued?

Up next in this series, let’s see how these top utilities yield at the moment. 

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