Eversource Energy (ES) just picked up a fresh catalyst, as the U.S. Department of Energy selected its DREAM grid project with Dartmouth Engineering for potential SPARK program funding.
Despite the DREAM grid news, Eversource Energy’s recent share price action has been mixed, with a 1-day share price return of 0.88% and 7-day gain of 2.13% set against a 30-day decline of 8.15% and 90-day fall of 11.57%. The 1-year total shareholder return is down 6.27%, but the 3-year total shareholder return is up 28.62%, indicating that shorter term momentum has weakened while longer term holders have still seen a positive overall outcome.
Scan the grid-theme further by comparing Eversource Energy with utilities and infrastructure peers picked out in our 44 power grid technology and infrastructure stocks.Eversource Energy now has a fresh grid project, solid revenue and profit growth, and a stock that has slid in recent months. Are you paying a fair price for that mix today?
Most Popular Narrative: 11% Undervalued
Eversource Energy’s most followed valuation story pegs fair value at about $73.58 per share, above the last close at $65.26. This frames today’s grid news against a stock already flagged as undervalued on that narrative.
The move toward a pure play regulated electric and gas utility has advanced with the US$2.4b Aquarion Water sale and exit from offshore wind development. This reduces non core exposure and allows more balance sheet capacity to support regulated investments that drive rate based revenue and earnings.
See why 17 investors see Eversource Energy as 11% undervalued.
Result: Fair Value of $73.58 (UNDERVALUED)
Still, the Eversource Energy story depends heavily on regulators allowing timely cost recovery, and on Revolution Wind avoiding further cost hits that drag on earnings.
Find out about the key risks to this Eversource Energy narrative.
Another View: Eversource Energy Through a Cash Flow Lens
The popular story around Eversource Energy leans on that $73.58 fair value from the analyst narrative, yet the SWS DCF model paints a different picture. On that cash flow view, ES at $65.26 sits above an estimated value of $58.79, which implies overvaluation rather than an 11% discount. Which lens do you trust more when cash flows and sentiment disagree?
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 Eversource 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 27 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
Mixed signals around Eversource Energy's value and project pipeline make this a charged moment for investors. Move quickly, weigh both the potential and the concerns, then ground your call in the 3 key rewards and 2 important warning signs.
Looking for more Eversource Energy sized opportunities?
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- Target potential mispricings by scanning a curated set of value focused ideas in the 27 high quality undervalued stocks.
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- Spot under the radar opportunities before the crowd by running your checks across the 19 high quality undiscovered gems.
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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