Valuation Scorecard: Stock Rating D-Negative (2/27/24)-Exelon Corp (EXC).

At the current price of $36, what is the market’s view of Exelon’s future operating performance? To achieve average annual stock market performance of 9.0% over the next 6 years, Exelon shares will need to reach $61. To achieve Upper quartile performance, Exelon’s stock price will need to reach $71 by 2028.

Executive Summary

• Price Target Research identifies Exelon as having: low profitability, low stability, very low expected growth, and low financial strength. A big negative influence on Exelon’s valuation is its poor Risk Profile.
• Average valuation, lagging shareholder returns. Current valuation levels are average relative to the Exelon Peer Group. Recent market returns have substantially underperformed the Exelon Peer Group. Total shareholder returns expected to lag the overall equity market. Based on current investor expectations, Exelon shares should reach a level of $44 by 2028 — an 7.0% per year total shareholder return. A 2028 stock price of $61 would reflect median performance and a price of $71 would be required to reach upper quartile performance.
• Exelon’s achieved growth is very low. Historical growth has been very low relative to the Exelon Peer Group and forecasted growth is relatively very low. Revenue Growth, Asset Growth, EPS Growth, and Equity Growth have all lagged. These factors have negatively affected market perceptions of Exelon. Exelon’s historical income statement growth and balance sheet growth have diverged. Revenue growth has fallen short of asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity. Exelon’s consensus growth expectations are lower than historical growth.
• Asset Turnover is group lagging. This factor has negatively affected market perceptions of Exelon. The company has normal cash needs.
• Risk Profile has been Exelon’s biggest valuation weakness. Exelon’s risk profile is very unfavorable. Overall variability has been very high with very high revenue variability, very high E.P.S. variability, and very high stock price volatility. Financial Strength is very low and earnings’ expectations are very low. The debt/capital ratio has risen very significantly.

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