RE:RE:Long term hold Pingopallie12 wrote: Over valued it is trading at 24 times earnings.
utlities trade at 17.
EPS is 1.32 x 17 = $ 22
Stocks trade at forward PE (which is why you'd usually use Adjusted Earnings of $1.96 per class A and Class B shares, MD&A p.44). On that base alone, you'd find the stock value around $34. Note that their Puerto Rico franchise will start later this year and they are looking at other opportunities after the sale of their fossil fuel based electricity generation business. They are also working on Hydrogen generation which may eventually grow revenues for CU and boost multiples.
Utilities value on the market also depend on regulated assets base value (which is $14.0B for CU). Current transactions on the market are happening at 2x regulated assets base. For the past few years, acquiring a utility at 1.8x regulated assets base was deemed cheap. If the share price lingers too much, they could look for an acquirer and a deal would happen over $48.
Utilities are often measured by their cashflow generated/share, which is about $6 per share. A trade value of just a bit over 5x cashflow is on the lower end for utilities.