Xcel Energy (XEL) is back in focus after securing a major power supply agreement for Google’s new Minnesota data center and lifting its quarterly dividend to $0.5925 per share, equivalent to $2.37 annually.

The Google data center agreement and dividend increase come as Xcel Energy’s share price has climbed to US$83.55, with an 11.88% year to date share price return and a 5 year total shareholder return of 66.17%. This suggests momentum has been building around its mix of growth projects and infrastructure risk management.

If deals like Google’s data center are on your radar, this could be a good moment to scan other power and grid operators using our 24 power grid technology and infrastructure stocks and see what else stands out.

With the share price up 21.93% over the past year and trading only about 6% below the average analyst target, the key question now is whether Xcel Energy still offers upside or if the market is already pricing in future growth.

Most Popular Narrative: 5.7% Undervalued

The most followed narrative values Xcel Energy at $88.65 per share versus the last close at $83.55, framing the current debate around earnings power and long term load growth.

Policy-driven decarbonization and climate measures are accelerating demand for wind, solar, and storage projects, with Xcel's aggressive clean energy buildout (aiming for over 80% carbon-free generation by 2030) supporting long-term regulated asset base expansion and sustained earnings growth.

Read the complete narrative. Read the complete narrative.

Curious how this fair value hangs together? Revenue growth, margin expansion, and a future earnings multiple all contribute to the assessment. The mix and scale of those inputs might surprise you.

Result: Fair Value of $88.65 (UNDERVALUED)

However, there are still real pressure points, including wildfire liabilities and the US$15b plus capital plan, which could strain the balance sheet and dilute shareholders.

Another View: Cash Flows Paint A Stricter Picture

While the narrative model points to a fair value of $88.65, our DCF model indicates Xcel Energy at $83.55 is trading above an estimated future cash flow value of $70.37. In plain terms, the current price already reflects richer cash flow assumptions. Which story do you think is closer to reality?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Xcel Energy 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 53 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

Feeling torn between the different signals in this story? Take a closer look at the numbers and think through what matters most to you, starting with 2 key rewards and 2 important warning signs.

Looking for more investment ideas?

If you are serious about building a stronger portfolio, do not stop at one utility. Use the Simply Wall Street Screener to uncover other angles you might be missing.

• Target resilient compounding potential by scanning companies that screen well on quality and value with our 53 high quality undervalued stocks.
• Prioritize income today and sustainability tomorrow by reviewing companies in the 15 dividend fortresses and see which yields stand out to you.
• Protect your downside first by checking stocks in the 80 resilient stocks with low risk scores and focus on businesses with more measured risk profiles.

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.