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Why Top Utility Stocks Look Expensive




NextEra Energy (NEE) stock is trading at 22 times its forward earnings, way beyond peers’ average. The stock looks expensive given its slow earnings growth and five-year average PE multiple. However, it is a faster-growing company among utilities.

FirstEnergy’s (FE) valuation also looks attractive. Its forward PE multiple is 16.7x, whereas its five-year average is ~17x. Broader utilities’ average valuation is ~18x.

XLU stk

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Utility stocks look expensive

American Electric Power (AEP) stock’s forward PE multiple is ~20x, higher than its five-year average of 17x and peers’ average multiple. Meanwhile, Exelon’s (EXC) forward PE multiple is 15.7x, lower than peers’ average and its five-year average of ~17x. The stock has soared ~22% in the last year.

Exelon released its first-quarter results last week. Its EPS of $0.87 aligned with analysts’ average but fell year-over-year from $0.96. To learn more, read Highlights from Exelon’s Q1 2019 Earnings.


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