IDACORP (IDA) Stock Looks Above Fair Value On A 54% Three Year Run
IDACORP stock has delivered a strong 54.4% gain over the past three years, while the latest intrinsic value work using a Dividend Discount Model suggests the current share price may sit at a premium to that estimate. At the same time, broader valuation checks flag the stock as leaning expensive rather than a clear bargain.
- Over the past three years, IDACORP has returned 54.4%, which puts more focus on whether recent gains already reflect the utility's fundamentals.
- Future dividend and cash flow resilience can support the current valuation, while any pressure on allowed returns, capital spending needs or funding costs may limit how much investors are willing to pay for the stock.
- The company scores 0 out of 6 on a broad value screen, which points to a stock that looks expensive on most checks rather than clearly cheap.
The issue now is whether IDACORP's current price around US$135.78 leaves enough valuation headroom for investors who are focusing on income and long term total returns.
Compare IDACORP's rich valuation and 54.4% three year return with a curated set of utilities and infrastructure peers, screened for income strength and pricing support in our 38 power grid technology and infrastructure stocks
Has IDACORP Run Too Far on Dividends?
The Dividend Discount Model (DDM) focuses on what you are paying today for the stream of future dividends from IDACORP. For this stock, the model uses an annual dividend per share of $3.963 and assumes long run dividend growth of about 3.7%, capped from a slightly higher raw input, with an expected growth rate of roughly 3.74%. That growth rate is anchored to the company’s recent return on equity of 9.37% and a payout ratio a little above 60%, which points to a balance between returning cash to shareholders and retaining earnings.
Based on these inputs, the DDM indicates an estimated intrinsic value of about $112 per share, which sits below the current share price near $135.78. The gap of roughly 21.2% suggests the market is pricing IDACORP for a stronger or safer income profile than the model assumes, even with relatively steady growth embedded in the calculation.
On this dividend based view, IDACORP stock currently appears overvalued on a DDM basis.
Our Dividend Discount Model (DDM) analysis suggests IDACORP may be overvalued by 21.2%. Discover 44 high quality undervalued stocks or create your own screener to find better value opportunities.
Where Does IDACORP Sit on Earnings?
P/E is usually a straightforward way to compare a steady utility like IDACORP with its sector. On this measure, IDACORP trades on a P/E of about 23.2x, which is slightly higher than the Electric Utilities industry average of roughly 20.2x and also a touch above the peer group average of about 22.9x. That indicates investors are paying a modest premium for the stock.
The fair P/E ratio for IDACORP, based on factors such as its sector, margins, growth profile and risk, comes out near 22.0x. The current multiple is only a little higher than this, so the gap is not large. The market is effectively asking investors to pay a small extra amount for the company’s earnings compared with what this model suggests as a more neutral level.
Overall, IDACORP appears roughly fairly valued on its current P/E multiple, with only a small premium to the modelled fair level.
See what the numbers say about this price — find out in our valuation breakdown.
The IDACORP Narrative: What Would Justify Today's Price?
Simply Wall St Narratives pick up where the valuation work on IDACORP leaves off and explain what would need to happen to its growth, margins and earnings for the stock to be worth materially more or less than today's price. Each Narrative treats fair value as a thesis about IDACORP's business that you can revisit over time rather than a one off snapshot, and you will find them on Simply Wall St's Community page.
You can be one of the first voices in the Simply Wall St community to set out a clear, number driven Narrative on IDACORP's growth, margins and execution. You can then watch how your thesis holds up as new results arrive. Share your view on whether the current pricing makes sense given IDACORP's income profile and risk, and help other investors think through what the next chapter could look like.
Do you think there's more to the story for IDACORP? Head over to our Community to see what others are saying!
The Bottom Line
For IDACORP, the Dividend Discount Model (DDM) points to an intrinsic value that is materially below the current share price, while the P/E work suggests the stock is only slightly expensive compared with peers. The broader checks, including the low value score, lean toward IDACORP looking fully priced rather than obviously cheap. From here, the key question is whether dividend growth and balance sheet demands evolve in a way that supports the current premium or push investors to reassess how much they are willing to pay for the stock.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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