![]() Paying a dividend but company has no free cash flows.Īnnual earnings are forecast to grow slower than the American market. Interest payments on debt are not well covered.ĭividend is low compared to the top 25% of dividend payers in the Electric Utilities market.Įxpensive based on P/E ratio and estimated fair value.Īnnual earnings are forecast to grow for the next 3 years.ĭebt is not well covered by operating cash flow. SWOT Analysis for Xcel EnergyĮarnings growth over the past year underperformed the Electric Utilities industry. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Beta is a measure of a stock's volatility, compared to the market as a whole. In this calculation we've used 6.4%, which is based on a levered beta of 0.800. Given that we are looking at Xcel Energy as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. We do this to reflect that growth tends to slow more in the early years than it does in later years.Ī DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: 10-year free cash flow (FCF) estimate We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. To start off with, we need to estimate the next ten years of cash flows. ![]() In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. See our latest analysis for Xcel Energy Step By Step Through The Calculation If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. However, a DCF is just one valuation metric among many, and it is not without flaws. We generally believe that a company's value is the present value of all of the cash it will generate in the future. There's really not all that much to it, even though it might appear quite complex. Our analysis will employ the Discounted Cash Flow (DCF) model. ( NASDAQ:XEL) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the forecast future cash flows of the company and discounting them back to today's value. ![]() The company was founded in 1909 and is headquartered in Minneapolis, MN.How far off is Xcel Energy Inc. The All Others segment engages in steam, appliance repair services, nonutility real estate activities, processing solid waste into refuse-derived fuel and investments in rental housing projects that qualify for low-income housing tax credits. The Regulated Natural Gas Utility segment transports, stores, and distributes natural gas primarily in portions of Minnesota, Wisconsin, North Dakota, Michigan, and Colorado. It also includes commodity trading operations. In addition, this segment includes sales for resale and provides wholesale transmission service to various entities in the United States. The Regulated Electric Utility segment generates, transmits, and distributes electricity primarily in Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Colorado, Texas, and New Mexico. It operates through the following three segments: Regulated Electric Utility, Regulated Natural Gas Utility and All Others. operates as a holding company engaged in the generation, purchase, transmission, distribution, and sale of electricity. ![]()
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