Meridian Energy (NZSE:MEL) has drawn fresh attention after reporting July 2026 generation volumes of 1,371 GWh, compared with 1,157 GWh in July 2025, highlighting a recent shift in its monthly operating profile.
See our latest analysis for Meridian Energy.
At a recent share price of NZ$5.55, Meridian Energy’s short term share price performance has been mixed, with the stock down over the past quarter but supported by a 1 year total shareholder return of 4.10% and a 5 year total shareholder return of 32.92%, which may indicate steady long term value creation for investors who have stayed the course.
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Meridian Energy’s higher July generation and uneven recent share performance now leave investors weighing the trade off between potential upside and the risks priced in at NZ$5.55. Does the current valuation still skew in favour of new buyers?
Preferred Price-to-Sales of 3.2x: Is it justified?
On Simply Wall St’s checks, Meridian Energy screens as good value on a discounted cash flow basis at NZ$9.75 per share compared with the current NZ$5.55, yet its preferred valuation multiple tells a different story. The stock is described as expensive on a P/S basis both against its own fair ratio and against peers, which gives you two very different reference points to weigh.
The price to sales ratio compares the company’s market value to its annual revenue and is often used for utilities and renewable generators where earnings can be more volatile. For Meridian Energy, that preferred multiple sits at 3.2x, which the fair ratio work suggests is higher than the level the market could eventually gravitate toward if pricing lined up with the underlying revenue profile.
Compared with similar companies, Meridian Energy’s 3.2x P/S is described as expensive versus the peer average of 2.8x and also expensive versus the global renewable energy average of 2.5x. On top of that, the stock is marked as expensive relative to an estimated fair P/S of 2.7x, which implies the current market price embeds richer revenue expectations than both sector norms and the regression based fair ratio would indicate.
Explore the SWS fair ratio for Meridian Energy
Result: Price-to-Sales of 3.2x (OVERVALUED)
However, investors still need to weigh Meridian Energy’s recent net loss of NZ$104 million and slightly lower annual revenue, which could challenge the current price-to-sales (P/S) premium.
Find out about the key risks to this Meridian Energy narrative.
Another view on Meridian Energy’s value
While Meridian Energy screens as expensive on a 3.2x P/S ratio, the SWS DCF model points in the other direction. It suggests a fair value of NZ$9.75 per share compared with the current NZ$5.55, which implies the stock could be undervalued on a cash flow basis. Which signal should matter more to you?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Meridian 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 256 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 Meridian Energy presenting mixed signals on value and fundamentals, it makes sense to move quickly, review the underlying data yourself and decide where you stand. To help frame both the concerns and the potential upside, check out the 2 key rewards and 1 important warning sign
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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.
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