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Why Top Utility Stocks Look Expensive

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Valuation

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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