TXNM Energy overview after recent rebranding

TXNM Energy (TXNM), formerly PNM Resources, recently changed its corporate name, drawing fresh attention to a regulated utility business that generates, transmits, and distributes electricity across New Mexico and Texas.

At a share price of $59.47, TXNM Energy has delivered a 1 year total shareholder return of 7.9% and a 3 year total shareholder return of 45.6%, suggesting relatively steady momentum for a regulated utility stock.

If you are looking beyond regulated utilities for what could be moving next, this is a good moment to scan 35 power grid technology and infrastructure stocks

With TXNM trading close to its quoted analyst target and recent returns already on the board, the key question is whether the stock still trades below its underlying value or if the market is already pricing in future growth.

Most Popular Narrative: 2.2% Undervalued

At $59.47, TXNM Energy sits slightly below the narrative fair value of $60.79, and that gap is built on a detailed view of grid investment and regulatory recovery.

Approval and timely cost recovery of over $546 million in capital improvements through resiliency plans and transmission upgrades will boost the regulated rate base, driving predictable increases in EBITDA and net income via scheduled rate hikes.

Analysts are leaning on a clear playbook here. Measured revenue expansion, firmer margins, and a reset earnings base all feed into that fair value. It is worth examining which assumptions carry the most weight and how far they extend current profitability.

Result: Fair Value of $60.79 (UNDERVALUED)

However, this depends on regulators continuing to approve cost recovery on heavy grid spending, and on extreme weather or wildfire liabilities not eroding returns on those projects.

Another way to look at TXNM Energy's valuation

The narrative fair value of $60.79 paints TXNM Energy as 2.2% undervalued, but the picture changes when you look at the current P/E of about 45x against the US Electric Utilities average of 21.9x and peers at 20.4x. That premium raises a simple question: is the story strong enough to justify paying roughly double for each dollar of earnings?

Next Steps

If this combination of fair value and premium multiples seems inconsistent, consider it a prompt to review the details yourself and quickly reach your own conclusion by examining the 5 important warning signs.

Looking for more investment ideas?

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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.