Eversource Energy may be overvalued with strong growth indicators, but the 13 analysts following the company give it an average rating of buy. The analysts have set target prices ranging from $78.0 to $104.0 per share, for an average of $88.23. At today's price of $69.51, Eversource Energy is trading -21.22% away from its average target price, suggesting there is an analyst consensus of strong upside potential.
Eversource Energy, a public utility holding company, engages in the energy delivery business. Based in Springfield, MA, the large-cap Utilities company has 9,626 full time employees. Eversource Energy has offered a 3.7% dividend yield over the last 12 months.
Eversource Energy has a trailing twelve month P/E ratio of 16.7, compared to an average of 22.89 for the Utilities sector. Based on its EPS guidance of 4.66, the company has a forward P/E ratio of 14.9. Based on the 10.6% compound average growth rate of Eversource Energy's historical and projected earnings per share, the company's PEG ratio is 1.73. This EPS growth rate is likely not sustainable, so will substitute the broader market's 5-year projected EPS growth rate of 8.6%, which gives us a PEG ratio of 2.14. This suggests that these shares are overvalued.
Furthermore, Eversource Energy is likely overvalued compared to its book value, since its P/B ratio of 1.54 is higher than the sector average of 1.03. The company's shares are currently trading 16.2% above their Graham number, implying that they are overvalued in terms of earnings and book value.
If analysts are giving the stock a good rating, it's likely that they are looking beyond simple valaution metrics and attempting to forecast the company's growth potential. For example, Eversource Energy has wide margins as you can see in the financial summary below.
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $8,526 | $8,904 | $9,863 | $12,289 |
| Gross Margins | 48.4% | 49.8% | 48.2% | 44.0% |
| Operating Margins | 21.5% | 22.3% | 20.2% | 17.9% |
| Net Margins | 10.66% | 13.53% | 12.37% | 11.43% |
| Net Income (MM) | $909 | $1,205 | $1,221 | $1,405 |
| Net Interest Income | -$533,197 | -$538,452 | -$582,334 | -$678,274 |
| Depreciation & Amort. | -$1,080,658 | -$1,159,059 | -$1,334,973 | -$1,643,138 |
| Earnings Per Share | $2.81 | $3.55 | $3.54 | $4.17 |
| EPS Growth | n/a | 26.33% | -0.28% | 17.8% |
| Diluted Shares (MM) | 323 | 340 | 345 | 349 |
| Free Cash Flow (MM) | -$902 | -$1,260 | -$1,212 | -$1,041 |
| Capital Expenditures (MM) | -$2,911 | -$2,943 | -$3,175 | -$3,442 |
| Net Current Assets (MM) | -$25,924 | -$28,750 | -$30,467 | -$33,379 |
| Current Ratio | 0.67 | 0.64 | 0.56 | 0.62 |
| Long Term Debt (MM) | $14,311 | $15,623 | $17,477 | $20,134 |
| Net Debt / EBITDA | 5.56 | 5.5 | 5.79 | 5.4 |
