Exelon Corp Valuation – January 2019 $EXC

Company Profile (excerpt from Reuters): Exelon Corporation, incorporated on February 4, 1999, is a utility services holding company. The Company, through its subsidiary, Exelon Generation Company, LLC (Generation), is engaged in the energy generation business. The Company, through its subsidiaries, Commonwealth Edison Company (ComEd), PECO Energy Company (PECO), Baltimore Gas and Electric Company (BGE), Pepco Holdings LLC (PHI), Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE), is engaged in the energy delivery businesses. The Company operates through 12 segments: Generation’s six segments: Mid-Atlantic, Midwest, New England, New York, ERCOT and Other Power Regions; ComEd; PECO; BGE, and PHI’s three utility segments: Pepco, DPL and ACE. Generation, ComEd, PECO, BGE, Pepco, DPL and ACE participate in energy markets that are administered by regional transmission organizations (RTOs) and independent system operators (ISOs).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EXC – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $44,675,862,737 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.33 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -34.76% Fail
6. Moderate PEmg Ratio PEmg < 20 17.88 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.34 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.33 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 10.47 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.58
MG Growth Estimate 2.60%
MG Value $35.38
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $37.46
MG Value based on 0% Growth $21.96
Market Implied Growth Rate 4.69%
Current Price $46.20
% of Intrinsic Value 130.58%

Exelon Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.2 in 2014 to an estimated $2.58 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.69% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Exelon Corporation revealed the company was trading above its Graham Number of $41.34. The company pays a dividend of $1.31 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.88, which was below the industry average of 21.62, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-74.87.

Exelon Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$74.87
Graham Number $41.34
PEmg 17.88
Current Ratio 1.33
PB Ratio 1.34
Current Dividend $1.31
Dividend Yield 2.84%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $13,473,000,000
Total Current Liabilities $10,140,000,000
Long-Term Debt $34,909,000,000
Total Assets $119,485,000,000
Intangible Assets $6,677,000,000
Total Liabilities $86,097,000,000
Shares Outstanding (Diluted Average) 970,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.45
Dec2017 $3.97
Dec2016 $1.22
Dec2015 $2.54
Dec2014 $1.88
Dec2013 $2.00
Dec2012 $1.42
Dec2011 $3.75
Dec2010 $3.87
Dec2009 $4.09
Dec2008 $4.13
Dec2007 $4.05
Dec2006 $2.35
Dec2005 $1.36
Dec2004 $2.78
Dec2003 $1.38
Dec2002 $2.22
Dec2001 $2.21
Dec2000 $0.92
Dec1999 $1.45
Dec1998 $1.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.58
Dec2017 $2.54
Dec2016 $1.82
Dec2015 $2.19
Dec2014 $2.20
Dec2013 $2.58
Dec2012 $3.07
Dec2011 $3.92
Dec2010 $3.90
Dec2009 $3.68
Dec2008 $3.29
Dec2007 $2.71
Dec2006 $2.03
Dec2005 $1.91
Dec2004 $2.09
Dec2003 $1.71
Dec2002 $1.78

Recommended Reading:

Other ModernGraham posts about the company

Exelon Corp Valuation – March 2018 $EXC
Exelon Corporation Valuation – July 2016 $EXC
23 Companies in the Spotlight This Week – 3/9/15
Exelon Corporation Annual Valuation – 2015 $EXC
22 Companies in the Spotlight This Week – 11/29/14

Other ModernGraham posts about related companies

NRG Energy Inc Valuation – January 2019 $NRG
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Edison International Valuation – January 2019 $EIX
WEC Energy Group Inc Valuation – January 2019 $WEC
Southern Co Valuation – January 2019 $SO
CenterPoint Energy Inc Valuation – January 2019 $CNP
CMS Energy Corp Valuation – January 2019 $CMS
Xcel Energy Inc Valuation – December 2018 $XEL

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Xcel Energy Inc Valuation – December 2018 $XEL

Company Profile (excerpt from Reuters): Xcel Energy Inc., incorporated on June 17, 1909, is a public utility holding company. The Company’s operations include the activity of four utility subsidiaries that serve electric and natural gas customers in eight states. Its segments include regulated electric utility, regulated natural gas utility and all other. Its utility subsidiaries include NSP-Minnesota, NSP-Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Co. (SPS), which serve customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. Along with WYCO Development LLC (WYCO), a joint venture formed with Colorado Interstate Gas Company, LLC (CIG) to develop and lease natural gas pipelines storage and compression facilities, and WestGas InterState, Inc. (WGI), an interstate natural gas pipeline company, these companies comprise the regulated utility operations.

Downloadable PDF version of this valuation:

ModernGraham Valuation of XEL – December 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $26,564,708,796 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.78 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 43.15% Pass
6. Moderate PEmg Ratio PEmg < 20 23.00 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.17 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.78 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -18.57 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.25
MG Growth Estimate 2.82%
MG Value $31.81
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $32.62
MG Value based on 0% Growth $19.12
Market Implied Growth Rate 7.25%
Current Price $51.73
% of Intrinsic Value 162.63%

Xcel Energy Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $2.25 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.25% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Xcel Energy Inc revealed the company was trading above its Graham Number of $35.19. The company pays a dividend of $1.44 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23, which was above the industry average of 22.27. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-58.06.

Xcel Energy Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$58.06
Graham Number $35.19
PEmg 23.00
Current Ratio 0.78
PB Ratio 2.17
Current Dividend $1.44
Dividend Yield 2.78%
Number of Consecutive Years of Dividend Growth 14

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $3,003,000,000
Total Current Liabilities $3,838,000,000
Long-Term Debt $15,508,000,000
Total Assets $44,835,000,000
Intangible Assets $0
Total Liabilities $32,670,000,000
Shares Outstanding (Diluted Average) 511,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.44
Dec2017 $2.25
Dec2016 $2.21
Dec2015 $1.94
Dec2014 $2.03
Dec2013 $1.91
Dec2012 $1.85
Dec2011 $1.72
Dec2010 $1.62
Dec2009 $1.48
Dec2008 $1.46
Dec2007 $1.35
Dec2006 $1.36
Dec2005 $1.23
Dec2004 $0.87
Dec2003 $1.50
Dec2002 -$5.82
Dec2001 $2.30
Dec2000 $1.54
Dec1999 $1.70
Dec1998 $1.91

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.25
Dec2017 $2.13
Dec2016 $2.04
Dec2015 $1.93
Dec2014 $1.89
Dec2013 $1.79
Dec2012 $1.69
Dec2011 $1.59
Dec2010 $1.50
Dec2009 $1.42
Dec2008 $1.34
Dec2007 $1.27
Dec2006 $0.77
Dec2005 $0.32
Dec2004 -$0.06
Dec2003 -$0.27
Dec2002 -$0.66

Recommended Reading:

Other ModernGraham posts about the company

Xcel Energy Inc Valuation – February 2018 $XEL
Xcel Energy Inc Valuation – May 2016 $XEL
Xcel Energy Inc. Analysis – September 2015 Update $XEL
The 10 Best Stocks For Value Investors This Week – 6/20/15
Xcel Energy Analysis – June 2015 Update $XEL

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Superior Plus Corp Valuation – August 2018 $TSX-SPB
Just Energy Group Inc Valuation – August 2018 $TSE:JE
South Jersey Industries Inc Valuation – July 2018 $SJI
Innergex Renewable Energy Inc Valuation – July 2018 $TSE:INE
Suburban Propane Partners LP Valuation – June 2018 $SPH
Public Service Enterprise Group Inc Valuation – June 2018 $PEG

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Exelon Corp Valuation – March 2018 $EXC

Company Profile (excerpt from Reuters): Exelon Corporation, incorporated on February 4, 1999, is a utility services holding company. The Company, through its subsidiary, Exelon Generation Company, LLC (Generation), is engaged in the energy generation business. The Company, through its subsidiaries, Commonwealth Edison Company (ComEd), PECO Energy Company (PECO), Baltimore Gas and Electric Company (BGE), Pepco Holdings LLC (PHI), Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE), is engaged in the energy delivery businesses. The Company operates through 12 segments: Generation’s six segments: Mid-Atlantic, Midwest, New England, New York, ERCOT and Other Power Regions; ComEd; PECO; BGE, and PHI’s three utility segments: Pepco, DPL and ACE. Generation, ComEd, PECO, BGE, Pepco, DPL and ACE participate in energy markets that are administered by regional transmission organizations (RTOs) and independent system operators (ISOs).

EXC Chart

EXC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EXC – March 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $37,644,142,265 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.10 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -31.60% Fail
6. Moderate PEmg Ratio PEmg < 20 14.41 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.26 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.10 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 31.37 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.71
MG Growth Estimate 3.44%
MG Value $41.62
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $39.25
MG Value based on 0% Growth $23.01
Market Implied Growth Rate 2.96%
Current Price $39.01
% of Intrinsic Value 93.74%

Exelon Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.2 in 2014 to an estimated $2.71 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 2.96% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Exelon Corporation revealed the company was trading below its Graham Number of $44.35. The company pays a dividend of $1.31 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.41, which was below the industry average of 24.93, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-77.57.

Exelon Corporation receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$77.57
Graham Number $44.35
PEmg 14.41
Current Ratio 1.10
PB Ratio 1.26
Current Dividend $1.31
Dividend Yield 3.36%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $11,834,000,000
Total Current Liabilities $10,796,000,000
Long-Term Debt $32,565,000,000
Total Assets $116,700,000,000
Intangible Assets $6,677,000,000
Total Liabilities $86,843,000,000
Shares Outstanding (Diluted Average) 967,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.82
Dec2017 $3.97
Dec2016 $1.22
Dec2015 $2.54
Dec2014 $1.88
Dec2013 $2.00
Dec2012 $1.42
Dec2011 $3.75
Dec2010 $3.87
Dec2009 $4.09
Dec2008 $4.13
Dec2007 $4.05
Dec2006 $2.35
Dec2005 $1.36
Dec2004 $2.78
Dec2003 $1.38
Dec2002 $2.22
Dec2001 $2.21
Dec2000 $0.92
Dec1999 $1.45
Dec1998 $1.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.71
Dec2017 $2.54
Dec2016 $1.82
Dec2015 $2.19
Dec2014 $2.20
Dec2013 $2.58
Dec2012 $3.07
Dec2011 $3.92
Dec2010 $3.90
Dec2009 $3.68
Dec2008 $3.29
Dec2007 $2.71
Dec2006 $2.03
Dec2005 $1.91
Dec2004 $2.09
Dec2003 $1.71
Dec2002 $1.78

Recommended Reading:

Other ModernGraham posts about the company

23 Companies in the Spotlight This Week – 3/9/15
Exelon Corporation Annual Valuation – 2015 $EXC
22 Companies in the Spotlight This Week – 11/29/14
Exelon Corporation Annual Valuation – 2014 $EXC
10 Companies in the Spotlight This Week – 11/30/2013

Other ModernGraham posts about related companies

DTE Energy Co Valuation – March 2018 $DTE
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FirstEnergy Corp Valuation – March 2018 $FE
Edison International Valuation – March 2018 $EIX
WEC Energy Group Inc Valuation – March 2018 $WEC
CenterPoint Energy Inc Valuation – March 2018 $CNP
Southern Co Valuation – March 2018 $SO
CMS Energy Corp Valuation – March 2018 $CMS
SCANA Corp Valuation – March 2018 $SCG
Xcel Energy Inc Valuation – February 2018 $XEL

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Xcel Energy Inc Valuation – February 2018 $XEL

Company Profile (obtained from Marketwatch): Xcel Energy, Inc. operates as a holding company, which engages in the generation, purchase, transmission, distribution and sale of electricity and natural gas business through its subsidiaries. It operates through the following segments: Regulated Electric Utility, Regulated Natural Gas Utility and All Others. The Regulated Electric Utility segment generates, transmits and distributes electricity primarily in portions of Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Colorado, Texas and New Mexico. In addition, this segment includes sales for resale and provides wholesale transmission service to various entities in the United States. It also includes commodity trading operations. The Regulated Natural Gas Utility segment transports, stores, and distributes natural gas primarily in portions of Minnesota, Wisconsin, North Dakota, Michigan and Colorado. The All Others segment engages in steam, appliance repair services, nonutility real estate activities, processing solid waste into refuse-derived fuel and investments in rental housing projects that qualify for low-income housing tax credits. The company was founded in 1909 and is headquartered in Minneapolis, MN.

XEL Chart

XEL data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XEL – February 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $22,189,239,554 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.73 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 42.32% Pass
6. Moderate PEmg Ratio PEmg < 20 19.54 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.95 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.73 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -13.02 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.24
MG Growth Estimate 2.71%
MG Value $31.15
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $32.42
MG Value based on 0% Growth $19.01
Market Implied Growth Rate 5.52%
Current Price $43.70
% of Intrinsic Value 140.30%

Xcel Energy Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $2.24 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.52% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Xcel Energy Inc revealed the company was trading above its Graham Number of $34.9. The company pays a dividend of $1.44 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.54, which was below the industry average of 24.79, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-56.02.

Xcel Energy Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$56.02
Graham Number $34.90
PEmg 19.54
Current Ratio 0.73
PB Ratio 1.95
Current Dividend $1.44
Dividend Yield 3.30%
Number of Consecutive Years of Dividend Growth 14

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $2,973,000,000
Total Current Liabilities $4,088,000,000
Long-Term Debt $14,520,000,000
Total Assets $43,030,000,000
Intangible Assets $0
Total Liabilities $31,575,000,000
Shares Outstanding (Diluted Average) 510,596,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.40
Dec2017 $2.25
Dec2016 $2.21
Dec2015 $1.94
Dec2014 $2.03
Dec2013 $1.91
Dec2012 $1.85
Dec2011 $1.72
Dec2010 $1.62
Dec2009 $1.48
Dec2008 $1.46
Dec2007 $1.35
Dec2006 $1.36
Dec2005 $1.23
Dec2004 $0.87
Dec2003 $1.50
Dec2002 -$5.82
Dec2001 $2.30
Dec2000 $1.54
Dec1999 $1.70
Dec1998 $1.91

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.24
Dec2017 $2.13
Dec2016 $2.04
Dec2015 $1.93
Dec2014 $1.89
Dec2013 $1.79
Dec2012 $1.69
Dec2011 $1.59
Dec2010 $1.50
Dec2009 $1.42
Dec2008 $1.34
Dec2007 $1.27
Dec2006 $0.77
Dec2005 $0.32
Dec2004 -$0.06
Dec2003 -$0.27
Dec2002 -$0.66

Recommended Reading:

Other ModernGraham posts about the company

Xcel Energy Inc Valuation – May 2016 $XEL
Xcel Energy Inc. Analysis – September 2015 Update $XEL
The 10 Best Stocks For Value Investors This Week – 6/20/15
Xcel Energy Analysis – June 2015 Update $XEL
18 Companies in the Spotlight This Week – 3/21/15

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Entergy Corp Valuation – April 2017 $ETR
California Water Service Group Valuation – Initial Coverage $CWT
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Pinnacle West Corp Valuation – March 2017 $PNW
NiSource Inc Valuation – March 2017 $NI

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Exelon Corporation Valuation – July 2016 $EXC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – June 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Exelon Corporation (EXC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Exelon Corporation is a utility services holding company. The Company operates through nine segments consisting of Exelon Generation Company, LLC’s (Generation’s) six power marketing segments, including Mid-Atlantic, Midwest, New England, New York, ERCOT and other regions; Commonwealth Edison Company (ComEd); PECO Energy Company (PECO), and Baltimore Gas and Electric Company (BGE). Its Generation segment consists of generation, physical delivery and marketing of power across geographical regions. Its ComEd segment consists of the purchase and retail sale of electricity and the provision of electricity transmission and distribution services to retail customers. Its PECO segment consists of the purchase and retail sale of electricity and the provision of electricity distribution and transmission services. Its BGE segment consists of the purchase and retail sale of electricity and natural gas, and the provision of electricity distribution and transmission and gas distribution services.

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ModernGraham Valuation of EXC – July 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $32,627,219,062 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.83 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -47.51% Fail
6. Moderate PEmg Ratio PEmg < 20 17.56 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.36 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.83 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -12.45 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EXC value chart July 2016

EPSmg $2.09
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $30.28
MG Value based on 0% Growth $17.75
Market Implied Growth Rate 4.53%
Current Price $36.67
% of Intrinsic Value N/A

Exelon Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.07 in 2012 to an estimated $2.09 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.53% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Exelon Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

EXC charts July 2016

Net Current Asset Value (NCAV) -$6.83
Graham Number $36.29
PEmg 17.56
Current Ratio 0.83
PB Ratio 0.36
Current Dividend $1.24
Dividend Yield 3.38%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $11,364,000,000
Total Current Liabilities $13,770,000,000
Long-Term Debt $29,955,000,000
Total Assets $111,742,000,000
Intangible Assets $6,688,000,000
Other Long-Term Liabilities $17,684,000,000
Shares Outstanding (Diluted Average) 925,000,000

Earnings Per Share History

Next Fiscal Year Estimate $2.02
Dec2015 $2.54
Dec2014 $1.88
Dec2013 $2.00
Dec2012 $1.42
Dec2011 $3.75
Dec2010 $3.87
Dec2009 $4.09
Dec2008 $4.13
Dec2007 $4.05
Dec2006 $2.35
Dec2005 $1.36
Dec2004 $2.78
Dec2003 $1.38
Dec2002 $2.22
Dec2001 $2.22
Dec2000 $1.44
Dec1999 $1.45
Dec1998 $1.12
Dec1997 -$3.40
Dec1996 $1.12

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.09
Dec2015 $2.19
Dec2014 $2.20
Dec2013 $2.58
Dec2012 $3.07
Dec2011 $3.92
Dec2010 $3.90
Dec2009 $3.68
Dec2008 $3.29
Dec2007 $2.71
Dec2006 $2.03
Dec2005 $1.91
Dec2004 $2.13
Dec2003 $1.78
Dec2002 $1.88
Dec2001 $1.33
Dec2000 $0.71

Recommended Reading:

Other ModernGraham posts about the company

23 Companies in the Spotlight This Week – 3/9/15
Exelon Corporation Annual Valuation – 2015 $EXC
22 Companies in the Spotlight This Week – 11/29/14
Exelon Corporation Annual Valuation – 2014 $EXC
10 Companies in the Spotlight This Week – 11/30/2013

Other ModernGraham posts about related companies

DTE Energy Co Valuation – July 2016 $DTE
AES Corporation Valuation – July 2016 $AES
FirstEnergy Corp Valuation – July 2016 $FE
Edison International Valuation – July 2016 $EIX
WEC Energy Group Inc Valuation – June 2016 $WEC
CenterPoint Energy Inc Valuation – June 2016 $CNP
Southern Company Valuation – June 2016 $SO
CMS Energy Corp Valuation – June 2016 $CMS
Xcel Energy Inc Valuation – May 2016 $XEL
PPL Corporation Valuation – January 2016 Update $PPL

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Xcel Energy Inc Valuation – May 2016 $XEL

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – March 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Xcel Energy Inc (XEL) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Xcel Energy Inc. is a public utility holding company. The Company’s operations include activity of four utility subsidiaries that serve electric and natural gas customers. Its segments are regulated electric utility, regulated natural gas utility and all other. The regulated electric utility segment generates, transmits and distributes electricity in Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Colorado, Texas and New Mexico. The regulated electric utility segment also includes commodity trading operations. The regulated natural gas utility segment transports, stores and distributes natural gas primarily in portions of Minnesota, Wisconsin, North Dakota, Michigan and Colorado. The all other category primarily includes steam revenue, appliance repair services, nonutility real estate activities, revenues associated with processing solid waste into refuse-derived fuel and investments in rental housing projects that qualify for low-income housing tax credits.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of XEL – May 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $21,054,497,921 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.86 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 43.12% Pass
6. Moderate PEmg Ratio PEmg < 20 20.45 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.98 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.86 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -28.84 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

XEL value Chart May 2016

EPSmg $2.02
MG Growth Estimate 2.93%
MG Value $29.07
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $29.36
MG Value based on 0% Growth $17.21
Market Implied Growth Rate 5.98%
Current Price $41.41
% of Intrinsic Value 142.47%

Xcel Energy Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.69 in 2012 to an estimated $2.02 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.98% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Xcel Energy Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

XEL Charts May 2016

Net Current Asset Value (NCAV) -$50.41
Graham Number $32.04
PEmg 20.45
Current Ratio 0.86
PB Ratio 1.98
Current Dividend $1.30
Dividend Yield 3.14%
Number of Consecutive Years of Dividend Growth 13

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $2,732,617,000
Total Current Liabilities $3,188,568,000
Long-term Debt $13,148,395,000
Total Assets $39,069,844,000
Intangible Assets $0
Total Liabilities $28,398,210,000
Shares Outstanding (Diluted Average) 509,150,000

Earnings Per Share History

Next Fiscal Year Estimate $2.17
12/1/2015 $1.94
12/1/2014 $2.03
12/1/2013 $1.91
12/1/2012 $1.85
12/1/2011 $1.72
12/1/2010 $1.62
12/1/2009 $1.48
12/1/2008 $1.46
12/1/2007 $1.35
12/1/2006 $1.36
12/1/2005 $1.23
12/1/2004 $0.87
12/1/2003 $1.50
12/1/2002 -$5.82
12/1/2001 $2.30
12/1/2000 $1.54
12/1/1999 $1.43
12/1/1998 $1.84
12/1/1997 $1.61
12/1/1996 $1.91

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.02
12/1/2015 $1.93
12/1/2014 $1.89
12/1/2013 $1.79
12/1/2012 $1.69
12/1/2011 $1.59
12/1/2010 $1.50
12/1/2009 $1.42
12/1/2008 $1.34
12/1/2007 $1.27
12/1/2006 $0.77
12/1/2005 $0.32
12/1/2004 -$0.06
12/1/2003 -$0.29
12/1/2002 -$0.71
12/1/2001 $1.82
12/1/2000 $1.60

Recommended Reading:

Other ModernGraham posts about the company

Xcel Energy Inc. Analysis – September 2015 Update $XEL
Xcel Energy Inc. Analysis – September 2015 Update $XEL
The 10 Best Stocks For Value Investors This Week – 6/20/15
Xcel Energy Analysis – June 2015 Update $XEL
18 Companies in the Spotlight This Week – 3/21/15

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Pepco Holdings Inc Valuation – December 2015 Update $POM
American Electric Power Co Valuation – November 2015 Update $AEP
Duke Energy Corporation Valuation – November 2015 Update $DUK
Sempra Energy Valuation – October 2015 Update $SRE

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Xcel Energy Inc. Analysis – September 2015 Update $XEL

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Xcel Energy Inc. (XEL) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Xcel Energy Inc. is a public utility holding company. The Company’s operations include the activity of four wholly owned utility subsidiaries that serve electric and natural gas customers in eight states. These utility subsidiaries are NSP-Minnesota NSP-Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Co. (SPS) and serve customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. Its segments include regulated electric utility, regulated natural gas utility and all other. The regulated electric utility segment generates, transmits and distributes electricity in Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Colorado, Texas and New Mexico. Regulated electric utility also includes commodity trading operations. The regulated natural gas utility segment transports, stores and distributes natural gas primarily in portions of Minnesota, Wisconsin, North Dakota, Michigan and Colorado.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of XEL – September 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $17,219,827,655 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.86 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 34.05% Pass
6. Moderate PEmg Ratio PEmg < 20 18.50 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.68 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.86 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -24.36 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

XEL value Chart September 2015

EPSmg $1.83
MG Growth Estimate 2.35%
MG Value $24.22
Opinion Overvalued
MG Value based on 3% Growth $26.60
MG Value based on 0% Growth $15.59
Market Implied Growth Rate 5.00%
Current Price $33.95
% of Intrinsic Value 140.15%

Xcel Energy Inc. qualifies for both the Defensive Investor and for the Enterprising Investor.  The Defensive Investor is only concerned by the low current ratio and the Enterprising Investor is willing to overlook concerns regarding the high level of debt relative to the current assets because the company passes the more conservative Defensive Investor requirements.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.59 in 2011 to an estimated $1.83 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 5% annual earnings loss over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Xcel Energy Inc. (XEL)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

XEL Charts September 2015

Net Current Asset Value (NCAV) -$47.14
Graham Number $27.43
PEmg 18.50
Current Ratio 0.86
PB Ratio 1.68
Dividend Yield 3.65%
Number of Consecutive Years of Dividend Growth 12

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $3,048,922,000
Total Current Liabilities $3,537,251,000
Long-Term Debt $11,896,130,000
Total Assets $37,268,810,000
Intangible Assets $0
Total Liabilities $26,999,740,000
Shares Outstanding (Diluted Average) 508,074,000

Earnings Per Share History

Next Fiscal Year Estimate $1.65
Dec14 $2.03
Dec13 $1.91
Dec12 $1.85
Dec11 $1.72
Dec10 $1.62
Dec09 $1.48
Dec08 $1.46
Dec07 $1.35
Dec06 $1.36
Dec05 $1.23
Dec04 $0.87
Dec03 $1.50
Dec02 -$5.82
Dec01 $2.30
Dec00 $1.54
Dec99 $1.43
Dec98 $1.84
Dec97 $1.61
Dec96 $1.91
Dec95 $1.96

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.83
Dec14 $1.89
Dec13 $1.79
Dec12 $1.69
Dec11 $1.59
Dec10 $1.50
Dec09 $1.42
Dec08 $1.34
Dec07 $1.27
Dec06 $0.77
Dec05 $0.32
Dec04 -$0.06
Dec03 -$0.29
Dec02 -$0.71
Dec01 $1.82
Dec00 $1.60
Dec99 $1.67

Recommended Reading:

Other ModernGraham posts about the company

The 10 Best Stocks For Value Investors This Week – 6/20/15
Xcel Energy Analysis – June 2015 Update $XEL
18 Companies in the Spotlight This Week – 3/21/15
Xcel Energy Inc. Quarterly Valuation – March 2015 $XEL
26 Companies in the Spotlight This Week – 12/13/14

Other ModernGraham posts about related companies

NextEra Energy Inc. Analysis – August 2015 Update $NEE
Westar Energy Inc. Analysis – Initial Coverage $WR
Eversource Energy Analysis – Initial Coverage $ES
Public Service Enterprise Group Inc. Analysis – 2015 Update $PEG
Xcel Energy Analysis – June 2015 Update $XEL
Consolidated Edison Analysis – 2015 Update $ED
Ameren Corporation Analysis – 2015 Update $AEE
NextEra Energy Inc. Quarterly Valuation – May 2015 $NEE
FirstEnergy Corporation Annual Valuation – 2015 $FE
Edison International Annual Valuation – 2015 $EIX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Xcel Energy Analysis – June 2015 Update $XEL

Xcel_EnergyBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – June 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Xcel Energy (XEL) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Xcel Energy Inc. is a public utility holding company. The Company’s operations include the activity of four wholly owned utility subsidiaries that serve electric and natural gas customers in eight states. These utility subsidiaries are NSP-Minnesota NSP-Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Co. (SPS) and serve customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. Its segments include regulated electric utility, regulated natural gas utility and all other. The regulated electric utility segment generates, transmits and distributes electricity in Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Colorado, Texas and New Mexico. Regulated electric utility also includes commodity trading operations. The regulated natural gas utility segment transports, stores and distributes natural gas primarily in portions of Minnesota, Wisconsin, North Dakota, Michigan and Colorado.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $32.45
MG Value $30.07
MG Opinion Fairly Valued
Value Based on 3% Growth $28.29
Value Based on 0% Growth $16.59
Market Implied Growth Rate 4.06%
NCAV -$46.53
PEmg 16.63
Current Ratio 0.81
PB Ratio 1.61

Balance Sheet – March 2015

Current Assets $3,057,000,000
Current Liabilities $3,775,000,000
Total Debt $11,499,000,000
Total Assets $36,879,000,000
Intangible Assets $0
Total Liabilities $26,664,000,000
Outstanding Shares 507,400,000

Earnings Per Share

2015 (estimate) $2.00
2014 $2.03
2013 $1.91
2012 $1.85
2011 $1.72
2010 $1.62
2009 $1.48
2008 $1.46
2007 $1.35
2006 $1.36
2005 $1.23

Earnings Per Share – ModernGraham

2015 (estimate) $1.95
2014 $1.89
2013 $1.79
2012 $1.69
2011 $1.59
2010 $1.50

Dividend History

Conclusion:

Xcel Energy qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned with the low current ratio, and the Enterprising Investor is willing to overlook concerns about the level of debt because the company passed the more conservative Defensive Investor requirements.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with the evaluation.  As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.59 in 2011 to an estimated $1.95 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 4.06% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Xcel Energy (XEL)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Xcel Energy Inc. Quarterly Valuation – March 2015 $XEL

Xcel_EnergyBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – March 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Xcel Energy Inc. (XEL) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Xcel Energy Inc. is a public utility holding company. The Company’s operations include the activity of four wholly owned utility subsidiaries that serve electric and natural gas customers in eight states. These utility subsidiaries are NSP-Minnesota, NSP-Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Co. (SPS), and serve customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. The Company has two segments. The regulated electric utility segment generates, transmits and distributes electricity in Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Colorado, Texas and New Mexico. In addition, this segment includes sales for resale and provides wholesale transmission service to various entities in the United States. The regulated natural gas utility segment transports, stores and distributes natural gas in portions of Minnesota, Wisconsin, North Dakota, Michigan and Colorado.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $33.74
MG Value $31.12
MG Opinion Fairly Valued
Value Based on 3% Growth $27.45
Value Based on 0% Growth $16.09
Market Implied Growth Rate 4.66%
NCAV -$46.13
PEmg 17.82
Current Ratio 0.83
PB Ratio 1.67

Balance Sheet – December 2014

Current Assets $3,364,000,000
Current Liabilities $4,065,000,000
Total Debt $11,500,000,000
Total Assets $36,958,000,000
Intangible Assets $0
Total Liabilities $26,743,000,000
Outstanding Shares 506,800,000

Earnings Per Share

2014 $2.03
2013 $1.91
2012 $1.85
2011 $1.72
2010 $1.62
2009 $1.48
2008 $1.46
2007 $1.35
2006 $1.36
2005 $1.23
2004 $0.87

Earnings Per Share – ModernGraham

2014 $1.89
2013 $1.79
2012 $1.69
2011 $1.59
2010 $1.50
2009 $1.42

Dividend History

Conclusion:

Xcel Energy Inc. is suitable for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor’s only concern is the low current ratio.  The Enterprising Investor is concerned with the level of debt relative to the current assets but is willing to overlook those concerns since the company qualifies for the more conservative Defensive Investor.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.50 in 2010 to $1.89 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 4.66% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

Be sure to check out previous ModernGraham valuations of Xcel Energy Inc. (XEL) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Xcel Energy Inc. (XEL)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Xcel Energy Inc. (XEL) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Exelon Corporation Annual Valuation – 2015 $EXC

220px-Exelon_Corp_logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – February 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Exelon Corporation (EXC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Exelon Corporation is an energy provider and holding Company for several energy businesses. Exelon is engaged in the energy generation business through its Exelon Generation Company, LLC (Generation) subsidiary; wholesale and retail energy sales through its Constellation business unit and the energy delivery business through its Baltimore Gas and Electric (BGE), Commonwealth Edison Company (ComEd) and PECO Energy Company (PECO) subsidiaries. Generation’s integrated business consists of its owned and contracted electric generating facilities and investments in generation ventures that are marketed through its customer-facing activities. ComEd’s energy delivery business consists of the purchase and regulated retail sale of electricity and the provision of transmission and distribution services to retail customers in northern Illinois. PECO’s energy delivery business in southeastern Pennsylvania and BGE’s in central Maryland.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $33.92
MG Value $0.00
MG Opinion #DIV/0!
Value Based on 3% Growth $31.93
Value Based on 0% Growth $18.72
Market Implied Growth Rate 3.45%
Net Current Asset Value (NCAV) -$59.88
PEmg 15.40
Current Ratio 1.38
PB Ratio 1.29

Balance Sheet – December 2014

Current Assets $12,097,000,000
Current Liabilities $8,762,000,000
Total Debt $20,010,000,000
Total Assets $86,814,000,000
Intangible Assets $2,672,000,000
Total Liabilities $64,013,000,000
Outstanding Shares 867,000,000

Earnings Per Share

2014 $1.88
2013 $2.00
2012 $1.42
2011 $3.75
2010 $3.87
2009 $4.09
2008 $4.13
2007 $4.05
2006 $2.35
2005 $1.36
2004 $2.78

Earnings Per Share – ModernGraham

2014 $2.20
2013 $2.58
2012 $3.07
2011 $3.92
2010 $3.90
2009 $3.68

Dividend History

Conclusion:

Exelon Corporation is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the the low current ratio, and the insufficient earnings growth over the last ten years.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $3.90 in 2010 to $2.20 for 2014.  This level of demonstrated lack of growth doesn’t support the market’s implied estimate of a 3.45% annual earnings over the next 7-10 years, leading the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Exelon Corporation (EXC) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Exelon Corporation (EXC)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Exelon Corporation (EXC) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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