Xcel Energy (XEL) is in focus after reporting first quarter 2026 earnings, reaffirming its full year EPS guidance of $4.04 to $4.16 and signing a new Google data center power agreement.

Recent news, including the Google data center agreement, Q1 2026 earnings and a planned US$4.3b follow on equity offering, comes as Xcel Energy’s share price return has gained 7% year to date. The 1 year total shareholder return sits at 19.82% and the 3 year total shareholder return is 34.10%, suggesting momentum has been building over a longer horizon.

If you are looking beyond utilities and data centers, this could be a good moment to see which power grid themed opportunities stand out via our 37 power grid technology and infrastructure stocks

With Xcel Energy’s share price up 7% year to date and analysts’ price targets sitting above the current US$79.91 level, the key question is whether the stock still trades at a discount or if the market is already pricing in potential future growth.

Most Popular Narrative: 13.3% Undervalued

With Xcel Energy last closing at $79.91 against a narrative fair value of about $92.17, the core question is how that gap is justified by expected earnings, revenue and margins.

Xcel Energy is entering a major infrastructure investment cycle, supported by surging demand from electrification of transportation, manufacturing onshoring, data centers, and home heating. This is positioning the company for multi-year, above-average rate base and revenue growth.

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

Want to see what sits behind that growth story? The narrative leans on steadily rising sales, expanding margins and a richer earnings multiple than many utilities usually command.

Result: Fair Value of $92.17 (UNDERVALUED)

However, the story could change quickly if large capital needs pressure the balance sheet, or if wildfire liabilities and regulatory setbacks weigh on future earnings expectations.

Another View: What The P/E Ratio Is Saying

While the narrative fair value of about $92.17 points to upside, the current P/E of 23.9x tells a more cautious story. It sits above the US Electric Utilities industry at 21.6x and the peer average at 19.3x, yet below the fair ratio of 26.7x that the market could move toward. As a result, the real risk may be that expectations are already quite full.

To see how this stacks up against the earnings assumptions behind that P/E gap, take a closer look at the valuation breakdown via the See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With both risks and rewards in play, sentiment around Xcel Energy is far from one sided. Move quickly, review the data, and weigh the 2 key rewards and 3 important warning signs

Looking for more investment ideas?

If Xcel Energy is on your radar, do not stop there. Use Simply Wall Street screeners to spot fresh opportunities that match your goals before others act.

• Target potential mispricing by scanning for quality stocks trading below their estimated worth through the 46 high quality undervalued stocks.
• Strengthen your income focus by reviewing companies with higher yields via the 14 dividend fortresses.
• Dial down risk by checking stocks that score well on resilience using the 68 resilient stocks with low risk scores.

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.