Richmond, Virginia-based Dominion Energy, Inc. (D) produces and distributes energy products. Valued at $45.37 billion by market cap, the company offers natural gas and electric energy transmission, gathering, and storage solutions. The company provides electricity and natural gas to 7.50 million customers in 18 states.
Shares of this leading energy company have underperformed the broader market considerably over the past year. D has gained 11.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 17.7%. However, in 2024, D’s stock is up 16.6%, surpassing SPX’s 11.5% rise on a YTD basis.
Narrowing the focus, D’s underperformance is also apparent compared to the S&P 500 Utilities Sector SPDR (XLU). The exchange-traded fund has gained about 15.3% over the past year. However, D’s returns on a YTD basis marginally outshine the ETF’s 16.5% gains over the same time frame.
On Aug. 1, D shares closed up more than 3% after reporting its Q2 results. Its adjusted EPS of $0.55 failed to meet Wall Street expectations of $0.58. The company’s revenue was $3.49 billion, missing Wall Street forecasts of $3.71 billion. D reaffirmed its full-year adjusted EPS and expects it to be between $2.62 and $2.87. It also reaffirmed its full-year 2025 operating EPS of between $3.25 and $3.54.
D’s overall performance can be attributed to the rise in power demand from data centers. The company expects power used by data centers to double by 2028 and is forecasting 4.5% to 5.5% growth this year in its Virginia unit, which makes up most of its business. D expects to connect 15 data centers in 2024 over and above the 94 it has connected over the last five years,
It has already connected nine new data centers this year. Meanwhile, its Coastal Virginia Offshore Wind project, a 2.6-gigawatt offshore wind energy project, is expected to be operational in 2026. The company recently acquired a 40,000-acre offshore wind lease from Avangrid to support up to 800 megawatts of wind energy in the 2030s.
For the current fiscal year, ending in December, analysts expect D’s EPS to grow 38.2% to $2.75 on a diluted basis. The company’s earnings surprise history is disappointing. It missed the consensus estimate in three of the last four quarters while beating the forecast on another occasion.
Among the 14 analysts covering D stock, the consensus rating is a “Moderate Buy.” That’s based on three “Strong Buy” ratings and 11 “Holds.”
This configuration is more bullish than three months ago, when the consensus rating was Hold, with one suggesting a “Moderate Sell.”
The mean price target of $53.17 represents a 1.8% downside to D’s current price levels. However, the Street-high price target of $57 suggests an upside potential of 5.2%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
