As of May 23, 2025, Xcel Energy Inc's estimated intrinsic value ranges from $48.59 to $204.27 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $73.62 | +6.4% |
| Discounted Cash Flow (5Y) | $79.25 | +14.5% |
| Dividend Discount Model (Multi-Stage) | $48.59 | -29.8% |
| Dividend Discount Model (Stable) | $72.24 | +4.4% |
| Earnings Power Value | $204.27 | +195.1% |
Is Xcel Energy Inc (XEL) undervalued or overvalued?
With the current market price at $69.21, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Xcel Energy Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.42 | 0.44 |
| Cost of equity | 5.8% | 7.4% |
| Cost of debt | 4.0% | 4.8% |
| Tax rate | 6.9% | 8.7% |
| Debt/Equity ratio | 0.7 | 0.7 |
| After-tax WACC | 4.9% | 6.1% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $79 | $75,864M | 84.9% |
| 10-Year Growth | $74 | $72,618M | 70.8% |
| 5-Year EBITDA | $46 | $56,535M | 79.8% |
| 10-Year EBITDA | $52 | $59,925M | 64.6% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $8,099M |
| Discount Rate (WACC) | 6.1% - 4.9% |
| Enterprise Value | $132,197M - $163,742M |
| Net Debt | $30,156M |
| Equity Value | $102,041M - $133,586M |
| Outstanding Shares | 577M |
| Fair Value | $177 - $232 |
| Selected Fair Value | $204.27 |
| Metric | Value |
|---|---|
| Market Capitalization | $39918M |
| Enterprise Value | $70074M |
| Trailing P/E | 20.67 |
| Forward P/E | 26.90 |
| Trailing EV/EBITDA | 6.25 |
| Current Dividend Yield | 287.69% |
| Dividend Growth Rate (5Y) | 8.24% |
| Debt-to-Equity Ratio | 0.70 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $22.09 |
| Discounted Cash Flow (5Y) | 25% | $19.81 |
| Dividend Discount Model (Multi-Stage) | 20% | $9.72 |
| Dividend Discount Model (Stable) | 15% | $10.84 |
| Earnings Power Value | 10% | $20.43 |
| Weighted Average | 100% | $82.88 |
Based on our comprehensive valuation analysis, Xcel Energy Inc's weighted average intrinsic value is $82.88, which is approximately 19.8% above the current market price of $69.21.
Key investment considerations:
Given these factors, we believe Xcel Energy Inc is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.