Assessing Exelon (EXC) Valuation As Recent Returns Send Mixed Signals

Why Exelon (EXC) is on investors’ radar right now

Exelon (EXC) has drawn attention after recent share performance, with a modest negative move over the past week and month, alongside a positive total return over the past 3 months and year.

For investors tracking utilities, Exelon’s current share price of $48.94, market value of about $50.5b, and value score of 3 provide a starting point for thinking about how the stock fits into a broader portfolio.

See our latest analysis for Exelon.

Recent trading has been slightly soft, with small 1-day, 7-day and 30-day share price declines. However, the 90-day share price return of 11.63% and 1-year total shareholder return of 13.41% point to momentum that has been building rather than fading.

If you are comparing Exelon with other power and grid players, it can help to widen the watchlist and scan 27 power grid technology and infrastructure stocks

With Exelon trading at $48.94 and analysts’ average price target at $51.41, the question is simple: are you looking at a fairly valued regulated utility, or a stock where the market is already pricing in the next leg of growth?

Most Popular Narrative: 4% Undervalued

Against Exelon’s last close at $48.94, the most followed narrative points to a fair value of about $50.88, implying modest undervaluation and putting the company’s long term grid build out under the spotlight.

The significant identified pipeline ($10B to $15B) in future transmission projects, combined with proven success in competitive bidding, provides clear visibility for outsized capital investment prospects that are expected to increase the regulated asset base and deliver compounding earnings and cash flow growth.

Read the complete narrative.

Curious what sits behind that transmission build out story? The narrative leans heavily on steady revenue expansion, rising margins and a richer profit multiple. The mix, and the pacing, are what really move the fair value.

Result: Fair Value of $50.88 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that fair value story can shift quickly if regulators push back on rate cases, or if rising grid capex and financing costs squeeze earnings more than expected.

Find out about the key risks to this Exelon narrative.

Another Take On Value

There is a catch. While analysts see Exelon as about 4% undervalued relative to a $50.88 fair value, the SWS DCF model points the other way, with an estimate of $18.36 per share. This implies the current $48.94 price is rich rather than cheap. Which story feels more realistic to you?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Exelon for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 62 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Given the mixed signals around value and growth potential, it makes sense to check the underlying data yourself and decide where you stand quickly. To frame that view with both caution and opportunity in mind, take a close look at the 4 key rewards and 2 important warning signs

Looking for more investment ideas?

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• Target resilient balance sheets by checking stocks filtered through the solid balance sheet and fundamentals stocks screener (40 results).
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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