Required knowledge for Exelon (EXC) Investors

It hasn't been a great afternoon session for Exelon investors, who have watched their shares sink by -1.3% to a price of $38.56. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.

Exelon's Valuation Is in Line With Its Sector Averages:

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 17.9 and a P/B ratio of 1.51.

Exelon's PEG ratio is 2.66, 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:

2018 2019 2020 2021 2022 2023
Revenue (MM) $35,978 $16,725 $16,663 $17,938 $19,078 $19,893
Gross Margins 11% 16% 13% 15% 17% 18%
Operating Margins 11.0% 16.0% 13.0% 15.0% 17.0% 18.0%
Net Margins 6.0% 18.0% 12.0% 10.0% 11.0% 11.0%
Net Income (MM) $2,079 $3,028 $1,954 $1,829 $2,171 $2,120
Net Interest Expense (MM) $1,529 $1,591 $1,610 $1,264 $1,422 $1,565
Depreciation & Amort. (MM) $5,971 $5,780 $6,527 $7,573 $3,533 $3,406
Free Cash Flow (MM) $1,050 -$589 -$3,813 -$4,969 $4,870 -$3,934
Capital Expenditures (MM) $7,594 $7,248 $8,048 $7,981 n/a $7,325
Net Current Assets (MM) -$73,259 -$78,367 -$81,887 -$84,261 -$63,269 -$65,459
Long Term Debt (MM) $34,075 $10,995 $14,057 $30,749 $35,272 $39,492
Net Debt / EBITDA 3.64 1.89 2.64 3.99 5.71 6.03

Exelon's financial statements include several red flags such as declining revenues and a flat capital expenditure trend, slimmer gross margins than its peers, and an unconvincing cash flow history. Additionally, the firm has a highly leveraged balance sheet. On the other hand, the company has positive EPS growth working in its favor. Furthermore, Exelon has average net margins with a positive growth rate.

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.