Quick Update for EXC Investors

We've been asking ourselves recently if the market has placed a fair valuation on Exelon. Let's dive into some of the fundamental values of this large-cap Utilities company to determine if there might be an opportunity here for value-minded investors.

A Lower P/E Ratio Than Its Sector Average but Trades Above Its Graham Number:

Exelon Corporation, a utility services holding company, engages in the energy distribution and transmission businesses in the United States and Canada. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 22.89 and an average price to book (P/B) ratio of 1.03. In contrast, Exelon has a trailing 12 month P/E ratio of 18.1 and a P/B ratio of 1.63.

Exelon's PEG ratio is 2.7, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

The Company's Revenues Are Declining:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $34,438 $33,039 $17,938 $19,078
Gross Margins 30.0% 28.8% 39.1% 42.1%
Operating Margins 12.6% 8.5% 15.0% 17.4%
Net Margins 8.53% 5.94% 9.51% 11.37%
Net Income (MM) $2,936 $1,963 $1,706 $2,170
Net Interest Expense (MM) -1,616 -1,635 -1,289 -1,447
Net Interest Expense (MM) -$1,616 -$1,635 -$1,289 -$1,447
Depreciation & Amort. (MM) -$5,780 -$6,527 -$6,434 -$3,533
Earnings Per Share $3.01 $2.01 $1.74 $2.26
EPS Growth n/a -33.22% -13.43% 29.89%
Diluted Shares (MM) 974 977 980 995
Free Cash Flow (MM) -$589 -$3,813 -$4,969 -$2,277
Capital Expenditures (MM) -$7,248 -$8,048 -$7,981 -$7,147
Net Current Assets (MM) -$78,367 -$81,887 -$84,261 -$63,269
Current Ratio 0.85 0.98 0.87 0.69
Long Term Debt (MM) $31,719 $35,483 $31,139 $35,662
Net Debt / EBITDA 3.35 3.68 3.58 5.29

Exelon suffers from declining revenues and a flat capital expenditure trend, slimmer gross margins than its peers, and declining EPS growth. The firm's financial statements also exhibit negative and highly variable cash flows and a highly leveraged balance sheet. On the other hand, the company has average operating margins with a positive growth rate working in its favor.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.