Exelon (EXC) is back on investors’ radar after its Illinois utility, ComEd, rolled out a Time-of-Day Pricing program. Attention is also building around the company’s upcoming quarterly earnings report later this month.

For context, Exelon’s share price has moved to $47.53, with an 8.22% year to date share price return and a 69.88% five year total shareholder return. This suggests interest has been building over a multi year period as grid investment and regulatory outcomes stay in focus.

If you are watching how utilities respond to changing energy use patterns, it can also be useful to scan other power and grid related opportunities through the Simply Wall St screener for 35 power grid technology and infrastructure stocks

Exelon appears to be a solid regulated utility story, with Time-of-Day pricing and grid investment drawing fresh attention, but the share price has already moved. Is the stock still offering fair value at around $47.53?

Most Popular Narrative: 3.7% Undervalued

At a last close of $47.53 versus a narrative fair value of $49.33, Exelon is framed as modestly undervalued, with the story anchored in long term grid investment and regulated earnings visibility.

The significant identified pipeline ($10B–$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.

Read the complete narrative. Read the complete narrative.

Curious what sits behind that fair value gap? The narrative leans on steady revenue expansion, firmer margins and a future earnings multiple that does some heavy lifting. The exact mix of growth rates, profitability assumptions and discounting is where the story really gets interesting.

Result: Fair Value of $49.33 (UNDERVALUED)

However, the Exelon narrative can shift quickly if regulators push back on cost recovery for grid projects or if distributed energy such as rooftop solar slows future load growth.

Another View: Exelon Through the SWS DCF Lens

The fair value narrative around Exelon leans on earnings and multiples, but the SWS DCF model tells a very different story. In that framework, the estimated value of future cash flows is $6.61 per share versus the current $47.53, which points to Exelon trading well above that cash flow based estimate. Which lens do you find more convincing for a long term utility holding?

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 49 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 around Exelon’s valuation and outlook, it can be useful to move quickly and test the numbers against your own expectations using the 4 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Exelon?

If Exelon has you thinking about where to put money to work next, do not let other opportunities slip by while you stay focused on a single stock.

• Target resilient cash generators by scanning companies in the 49 high quality undervalued stocks that combine attractive prices with solid fundamentals and room for a stronger market narrative.
• Build a steadier income stream by reviewing the 9 dividend fortresses, which focuses on companies offering higher yields that may appeal to dividend focused portfolios.
• Reduce portfolio stress by checking the 81 resilient stocks with low risk scores, highlighting stocks with characteristics that may help smooth returns when markets turn choppy.

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.