What Exelon’s Recent Performance Signals for Investors

Exelon (EXC) has drawn investor attention after mixed recent returns, with the stock slightly higher year to date but down over the past month and past 3 months, against a backdrop of continued profitability.

Despite a recent 30 day share price return that is down 2.93% and a 90 day share price return that is down 7.74%, Exelon’s longer term total shareholder returns of 6.91% over 1 year and 65.86% over 5 years indicate momentum that has built over time rather than in the latest quarter.

If Exelon’s mix of stability and growth appeals to you, it may be a suitable moment to broaden your watchlist and check out 33 power grid technology and infrastructure stocks

With Exelon trading at US$45.64 and sitting below the average analyst price target, yet having reported steady revenue and net income growth, the key question is whether the stock is undervalued or whether the market already reflects potential future gains.

Most Popular Narrative: 7.9% Undervalued

With Exelon’s fair value in the most widely followed narrative set at about $49.56 versus a last close of $45.64, the storyline points to some upside still being priced in by analysts.

The significant identified pipeline ($10B to $15B) in future transmission projects, combined with proven success in competitive bidding, provides clear visibility for outsized capital investment prospects that are expected to increase the regulated asset base and deliver compounding earnings and cash flow growth.

Analysts are effectively tying Exelon’s potential to a long build out of grid assets, regulated returns, and a step up in earnings power over time. The projections rest on a carefully phased capital plan, firm assumptions for revenue growth, and a premium profit margin profile that is meant to support that $49.56 fair value without stretching the discount rate too far.

Result: Fair Value of $49.56 (UNDERVALUED)

However, this narrative could be knocked off course if regulators push back on bill increases or if rising grid investment needs outpace Exelon’s ability to recover costs.

Another Angle On Valuation

While the fair value narrative suggests Exelon is about 7.9% undervalued at $49.56 versus a $45.64 share price, the SWS DCF model paints a very different picture, with an estimated future cash flow value of just $4.98 per share. This implies the stock looks expensive on this measure. Which lens feels more realistic for you?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Exelon for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With mixed signals across valuation models and sentiment split between risks and rewards, this is a good time to look through the numbers yourself and stress test your own thesis using the 4 key rewards and 2 important warning signs.

Looking for more investment ideas?

If you stop with Exelon, you could miss other stocks that fit your goals, so take a few minutes to widen your search with targeted screeners.

• Spot potential mispricings early by scanning a curated list of 46 high quality undervalued stocks that pair quality with appealing valuations.
• Focus on resilience first by filtering for 62 resilient stocks with low risk scores that may suit a more cautious approach without ignoring opportunity.
• Hunt for fresh opportunities before they are widely followed by checking a screener containing 22 high quality undiscovered gems that still show strong fundamentals.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.