Assessing Xcel Energy (XEL) Valuation After Its Recent Share Price Pullback

Xcel Energy (XEL) has quietly slipped about 3% over the past week and 9% over the past month, even as its one year total return still sits in double digits.

See our latest analysis for Xcel Energy.

At around $73.73, the recent pullback in Xcel Energy’s share price, including an 8.5% 1 month share price decline, looks more like fading near term momentum than a reversal of its solid longer term total shareholder returns.

If this kind of defensive name has your attention, it might also be worth exploring healthcare stocks for other resilient ideas that could complement a utilities heavy portfolio.

With shares now trading below analysts’ average target and growth in both revenue and earnings still solid, investors face a familiar dilemma: is Xcel Energy temporarily mispriced, or is the market already baking in years of steady expansion?

Most Popular Narrative Narrative: 16.6% Undervalued

With Xcel Energy last closing at $73.73 against a most popular narrative fair value in the high $80s, the case hinges on a powerful long term growth engine.

Analysts are assuming Xcel Energy's revenue will grow by 7.6% annually over the next 3 years.

Analysts assume that profit margins will increase from 14.9% today to 16.7% in 3 years time.

Read the complete narrative.

Curious how steady utility growth turns into a richer future earnings multiple and a higher fair value than today? The load growth story may surprise you.

Result: Fair Value of $88.35 (UNDERVALUED)

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

However, persistent wildfire liabilities and delayed regulatory approvals on Xcel’s sizable capex pipeline could pressure earnings and derail the undervaluation narrative.

Find out about the key risks to this Xcel Energy narrative.

Another View: Valuation Looks Less Generous On Cash Flows

Our DCF model paints a cooler picture, suggesting Xcel Energy’s fair value sits closer to $65.71. That would make today’s $73.73 share price look overvalued rather than cheap. If future cash flows disappoint even modestly, how much downside room does that leave?

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 Xcel Energy 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 910 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Xcel Energy Narrative

If you see things differently or would rather dig into the numbers yourself, you can build a personalized view in just minutes: Do it your way.

A great starting point for your Xcel Energy research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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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