How Dominion Energy’s Clean Energy Focus Shapes Its 2025 Investment Appeal

If you are considering what to do with Dominion Energy, you are definitely not alone. The stock has caught the eyes of investors who are trying to make sense of its recent moves and long-term potential. After a relatively flat past month, with the price up only about 0.1% in 30 days, Dominion has shown some steadier improvement in 2024, posting a 12.2% gain so far this year. Over the last year, shares are up 7.4%, but if you zoom out to a five-year view, there has actually been a 5.6% decline.

What is behind these short-term bumps and the lingering longer-term uncertainty? Recently, Dominion Energy made headlines with its renewed focus on streamlining operations, divesting non-core businesses, and pushing further into clean energy projects. These moves are generating both optimism and caution in the market. Investors seem to be weighing the company’s pivot toward renewables, along with the associated upfront costs, against its traditionally steady utilities business. While none of these headlines created seismic shifts by themselves, they have helped shape the narrative around risk and future growth potential.

Now, when it comes to value, Dominion Energy scores a 2 out of 6 on our quick valuation check, meaning it is only considered undervalued on two out of the six methods we use. But numbers alone do not always give the full picture. To really know if Dominion is a deal or a risk, it pays to break down the methods behind that score. There is an even more insightful approach to valuation waiting at the end.

Dominion Energy scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Dominion Energy Dividend Discount Model (DDM) Analysis

The Dividend Discount Model (DDM) estimates a stock’s intrinsic value by evaluating the present value of all expected future dividends. It is commonly used for utility companies like Dominion Energy, which have a record of steady dividends.

According to the DDM, Dominion Energy’s most recent dividend per share stands at $2.69. The company has a return on equity of 6.49%. Its payout ratio is 105.41%, meaning it is currently distributing more in dividends than it earns in profits. The model calculates an expected dividend growth rate of about -0.35%, which implies little to no growth is anticipated in future dividends. This is based on the formula (1 - payout ratio) x ROE, and with a payout above 100%, the potential for future increase is limited.

The DDM calculates an intrinsic value for Dominion at $37.76 per share. Currently, the stock’s price is significantly higher than this estimated fair value, suggesting the market is pricing in more optimism than the dividend outlook supports. In fact, the DDM implies the shares are approximately 61.7% overvalued versus their calculated worth.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Dominion Energy.

Our Dividend Discount Model (DDM) analysis suggests Dominion Energy may be overvalued by 61.7%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Dominion Energy Price vs Earnings

For profitable companies like Dominion Energy, the price-to-earnings (PE) ratio is often the go-to measure for valuation. PE is widely used because it links the company’s share price directly to its earnings, offering a quick way to see what investors are willing to pay for every dollar of profit.

What counts as a “fair” PE ratio, however, depends on many factors. Higher growth prospects, less risk, or stronger profit margins often justify a higher PE, while slower growth or more uncertainty push it lower. That is why simply comparing PE ratios can sometimes give a misleading impression.

Right now, Dominion Energy trades at a PE of 20.44x. To put this in perspective, the average PE for its Integrated Utilities industry sits at around 18.27x, while the average of its direct peers clocks in at 21.17x. On their own, these numbers suggest Dominion is priced slightly above the general industry but a touch below its closest competitors.

Enter the Simply Wall St “Fair Ratio,” which considers far more than just what others are paying. It also factors in Dominion’s own earnings growth, risk profile, profit margins, market cap, and industry characteristics. This delivers a more tailored assessment than blunt peer or sector comparisons.

For Dominion, the Fair Ratio is calculated to be 23.05x. Since the company’s actual PE of 20.44x is lower than this, it indicates the stock is undervalued when all those unique factors are weighed together.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Dominion Energy Narrative

Earlier, we mentioned there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is a simple yet powerful way for investors to combine their perspective on a company’s story—where it’s heading, what risks and opportunities matter most—with concrete forecasts like future revenue, earnings, and profit margins. Narratives link the “why” behind a company’s outlook to financial forecasts and ultimately to an estimated fair value. This approach makes your investment decision less about abstract numbers and more about your unique view of the business.

Available right on Simply Wall St’s Community page and used by millions of investors, Narratives are easy to create and update. They help you decide when to buy or sell by comparing your Narrative’s calculated Fair Value to the current market price. As new news comes out or fresh earnings are announced, Narratives update dynamically, so your conclusions automatically adjust with reality. For Dominion Energy, for example, some investors might believe robust Southeast demand justifies a fair value near the highest analyst target of $67.0. Others, factoring in project risks and regulatory uncertainty, may choose a more conservative estimate closer to $54.0. Narratives let you map your reasoning, watch it play out in real time, and invest with smarter conviction.

Do you think there's more to the story for Dominion Energy? Create your own Narrative to let the Community know!

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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