A Short Intro for Dominion Energy Investors

We've been asking ourselves recently if the market has placed a fair valuation on Dominion Energy. 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.

Dominion Energy Is Fairly Valued:

Dominion Energy, Inc. produces and distributes energy in the United States. 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, Dominion Energy has a trailing 12 month P/E ratio of 15.6 and a P/B ratio of 1.5.

When we divide Dominion Energy's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -3.2. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.

The Company Has a Highly Leveraged Balance Sheet and a Declining EPS Growth Trend:

2018 2019 2020 2021 2022 2023
Revenue (MM) $11,199 $14,401 $14,172 $13,964 $17,174 $18,345
Gross Margins 27% 11% 15% 22% 9% 17%
Operating Margins 28.0% 12.0% 15.0% 22.0% 9.0% 17.0%
Net Margins 23.0% 10.0% 11.0% 24.0% 6.0% 13.0%
Net Income (MM) $2,549 $1,376 $1,583 $3,314 $994 $2,333
Net Interest Expense (MM) $1,279 $1,486 $1,377 $1,354 $966 $1,761
Depreciation & Amort. (MM) $1,660 $2,283 $2,332 $2,478 $2,830 $2,863
Earnings Per Share $3.74 $1.62 -$0.57 $3.98 $1.09 $2.7
Diluted Shares (MM) 655 809 831 808 825 846
Free Cash Flow (MM) $519 $224 $247 $2,575 $3,700 $5,533
Net Current Assets (MM) -$50,705 -$63,694 -$62,558 -$63,403 -$66,512 -$69,659
Long Term Debt (MM) $31,144 $28,998 $33,957 $37,426 $38,914 $39,223
Net Debt / EBITDA 6.8 7.57 8.41 6.8 10.3 8.05

Dominion Energy has slimmer gross margins than its peers, declining EPS growth, and a highly leveraged balance sheet. On the other hand, the company benefits from growing revenues and no capital expenditures and a pattern of improving cash flows. Furthermore, Dominion Energy has average net margins with a negative growth trend.

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.