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| Fundamental Analysis
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Growth |
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Market Growth LT |
F |
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Market Growth ST |
F |
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Rel. Price Strength |
B |
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Growth Potential |
D |
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Dividend Growth |
B- |
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Earnings Surprise |
B |
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Very Poor Top and Bottom Line Record -
Exelon Corp's poor growth record over the short and long term evidence a troubled and uncertain business model.
Compared to full year results published three years before, the company's annual revenue contracted 0.6% during its fiscal year ended December 31, 2009 while year to year quarterly sales increased 6.2% in its most recently reported quarter.
In its most recent annual results, full year net income increased 30.9% compared to the same figure three years ago while the company's net income fell by 32.4% in the most recently reported quarter relative to the same quarter a year before.
Its dividend growth is acceptable, with an average short term (year over year) and long term (three year) annual cash dividend growth rate of 19.5%.
EXC's latest earnings release of July 22, 2010 significantly disappointed investors as reflected by a 2.2% drop in the price of the stock in the days surrounding the announcement.
However, the company is averaging a 6.5% earnings surprise (difference between expected and actual earnings) over its last six reported quarterly figures, which means it's consistently managing to beat quarterly Wall Street estimates, an important driver of stock price momentum.
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Value
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Capital Structure |
D |
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P/E Analysis |
C |
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Price/Book Ratio |
A+ |
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Price/Cash Flow Ratio |
A |
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Price/Sales Ratio |
F |
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Market Value |
B |
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Deteriorating Valuation -
EXC trades at about 10.9 times earnings per basic share (excluding extraordinary items); this
compares unfavorably to the MarketGrader-calculated optimum PE ratio of 8.5, based on
a historical negative EPS growth rate, suggesting the stock is slightly overvalued.
Our optimum PE Analysis assigns each stock the highest possible valuation afforded by its long term EPS growth rate;
this historical growth rate measures the average year-to-year change in earnings per share for the company's last eight quarters (when available).
Due to the company's meager revenue and earnings per share growth, there are no fundamental drivers to positively impact the stock price in the near future.
The stock trades at 0.00 times tangible book value per share (tangible book value is based on the company's common equity minus intangibles such as goodwill); this is an attractive valuation were management to undertake steps in an attempt to unlock the true value of assets on the balance sheet.
It trades also at 5.10 times cash flow per share, a sign that investors are assigning relatively little value to the company's non-cash assets and its earnings potential.
EXC trades unfavorably at 1.59 times trailing 12-month sales,
a 26.03% premium to the Electric Utilities industry average price to sales ratio of 1.26.
The company's market capitalization of $27,576.71 million is 28.61 times its latest quarterly net income (including depreciation), representing an acceptable valuation.
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Profitability
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Yield Analysis |
A- |
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Capital Utilization |
B- |
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Operating Margins |
A- |
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Relative Margins |
A+ |
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Return on Equity |
B- |
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Quality of Revenues |
A- |
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Adequate Operating Results -
Exelon Corp exhibits adequate operating performance with an acceptable 19.2% return on equity.
The company's leverage, with long term debt accounting for 45.77% of total capital, seems acceptable at these levels and poses no long term risk.
However, the balance sheet seems barely acceptable considering the company had $1,627.00 million in cash on hand in the most recent quarter but $12,334.00 million in total debt.
The company's Yield Analysis, which measures the relationship between the dividend yield and the return on equity looks very strong, an important profitability measure for Utilities. Being highly regulated at both the state and federal level, Utilities offer few growth prospects for investors, who instead covet them for their dividend.
Especially important are EXC's operating margins of 14.6%, 66.3% higher than the 17.24% Electric Utilities Industry average.
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Cash Flow
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Cash Flow Growth |
F |
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EBIDTA Margin |
B+ |
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Debt/Cash Flow Ratio |
A |
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Interest Cov. Capacity |
C |
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Yield Analysis |
A- |
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Dividend Yield |
B |
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Acceptable Cash Situation Leaves Room for Improvement -
EXC displays negative year-to-year cash flow growth of -53.7%
and a healthy EBITDA (earnings before interest, taxes, depreciation and amortization) margin of 0%.
Given the company's current capital structure, its ability to service its debt seems very adequate, as suggested by a 2.3 debt to cash flow ratio, with total cash flow for the most recent quarter ended June 30, 2010 of $508 million compared with $1,097 million for the same quarter a year before.
EXC's acceptable dividend yield of 5% rates this company as average among its peers based on its ability to generate income for investors.
The cash dividend declared on the company's common stock for its most recent fiscal year ended 12/31/2009 was $2.02 per share.
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