Exelon Corporation (EXC)
Servicios públicos / Electricidad y gas natural (transmisión y distribución reguladas, 6 subsidiarias)
A 100% regulated transmission and distribution holding company (no owned generation): six subsidiaries — ComEd, PECO, BGE, Pepco, DPL, and ACE — serving ~9.5 million electric accounts across five states and the District of Columbia, with a ~$41,000 million capital plan (2026-2029) financed with debt and equity issuance. But at ~$44 the base 5-year return is around ~$57 (+5%/year in price, +9% with the dividend): Fairly valued — a genuine regulatory moat, with a modest return on capital that is already largely reflected in the price.
- Price
- $44.15
- Intrinsic value (5y, base)
- $57
- Total annual return (5y)
- 9.2%
- Status (nominal)
- Fairly valued
- Margin of safety
- +19%
The essentials
- A pure transmission and distribution holding company (no owned generation): six regulated subsidiaries of the same economic nature — ComEd (Illinois), PECO (Pennsylvania), BGE (Maryland), Pepco (District of Columbia and Maryland), DPL (Delaware and Maryland), and ACE (New Jersey) — that charge rates approved by six distinct state commissions plus FERC for transmission.
- Attributable net income (derived from pre-tax income less taxes, XBRL) grew unevenly: +13.4% in 2023, +5.7% in 2024, +12.5% in 2025 — the 2025 jump includes a favorable weather tailwind (~$70M pre-tax at PECO and DPL) that is not extrapolated. No company-published earnings growth guidance was captured in this extraction; the real driver is the consolidated capital plan (~$9,950M in 2026, ~$41,000M through 2029) that raises the rate base by ~$23,000M by year-end 2029.
- At ~$44 it trades at ~17× trailing-twelve-month attributable net income — below the group of mature regulated utilities cited (AEP ~19-21×, Duke ~21×), consistent with a consolidated earned ROE (~9.5%) lower than those peers. The base return (+9% total: +5%/year in price and +4% from the dividend) is Fairly valued.
Intrinsic value — two valuation methods
Total return at 5 years: 9.3%/year = 5.3% appreciation + 4.0% dividend. The target price ($57) is ex-dividend; the $10 in dividends collected over 5 years are added separately.
By both methods, the value today (DCF $85 · Multiples $54) exceeds the market price ($44).
Pillars of the analysis
The verdict — today vs 5 years
Today — fairly valued: at $44 trades ~18.8% below its value discounted to today (~$54); the discount is positive but does not reach the margin of safety we require (≥38%).
At 5 years — En valor: the target price ($57) plus dividends yield between the 4% floor and the 10% average return — a reasonable return, though without the margin of a great investment.
The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$35.
Thesis
The business
Exelon is a 100% regulated transmission and distribution holding company, with no owned generation: six subsidiaries of the same economic nature serving ~9.5 million electric accounts across six jurisdictions. The absence of a competitive segment or an unregulated renewables arm makes it simpler to value than a hybrid utility, at the cost of not having a higher-growth piece to support a multiple premium.
The valuation
It is valued on P/E over attributable net income (derived from pre-tax income less taxes, XBRL; no company-published earnings growth guidance was identified in this extraction, though the company does report a non-GAAP adjusted EPS with only two years of history available). Trailing-twelve-month attributable net income is $2,779M — with an uneven trajectory (+13.4% FY23, +5.7% FY24, +12.5% FY25) that includes a favorable weather tailwind in 2025 (~$70M pre-tax at PECO and DPL) that is not extrapolated. The base scenario normalizes the starting point to the three-year trajectory average (~10%, not the 2025 peak), decelerating to ~5.5% by year 5, with the multiple compressing from ~17× today to ~16× (within the §4 band for a regulated utility, 15-18×) → ~$57/share → price CAGR of +5%, +9% with the dividend (3.8%).
The margin of safety
It trades close to intrinsic value, far from the required margin of safety. The base return (+9% total: +5%/year in price and +4% from the dividend) is in line with the average return on stocks (~10%, the method's bar), without being generous. The verdict is Fairly valued: a business with a genuine regulatory moat and a simple structure (without the complexities of a hybrid utility), at a multiple below the peer group that reasonably reflects a consolidated earned ROE (~9.5%) more modest than that of its higher-quality comparables (AEP ~11.2%, NextEra ~11.7%).
What to watch
Three things. Whether organic net income for the next fiscal year holds up without the favorable 2025 weather tailwind — that is the real test of the normalized trajectory. ComEd's franchise with the City of Chicago (terminable with one year's notice, with a municipal purchase option) is the idiosyncratic risk most cited in the 10-K itself. And execution of the ~$41,000 million capital plan (2026-2029): it depends on continued access to debt markets and equity issuance (~1.8%/year projected dilution) to finance it, and on full rate recognition across six distinct jurisdictions.
Educational / informational. Does not constitute investment advice.