Xcel Energy (XEL) Funds Electric School Buses, Is It Still A Bargain?

Xcel Energy (XEL) is back in focus after supporting Jefferson County Public Schools with funding for six electric school buses and bidirectional chargers, a small but telling data point for the utility’s grid and transportation ambitions.

For investors watching Xcel Energy, the electric bus project lands at a time when the 1-day share price return of 1.30% and 7-day share price return of 3.98% hint at short-term momentum, even as the 30-day and 90-day share price returns show declines. The 1-year total shareholder return of 6.92% lower contrasts with a 39.57% gain over three years and 31.65% over five years, pointing to a story where recent weakness sits against a longer record of positive compounding and fresh headlines around grid investment, large-load tariffs for data centers in Texas, a planned Michigan divestiture, and an upcoming third-quarter earnings update.

Scan beyond Xcel Energy and size up other grid and power infrastructure plays with the hand picked 43 power grid technology and infrastructure stocks that could benefit from similar electrification and large load trends.

The share price has bounced over the past week but remains weaker over the past year. Given Xcel Energy’s current earnings, cash flows, and asset base, does that recent pop still leave room on the upside for new buyers or not?

Most Popular Narrative: 20% Undervalued

Xcel Energy is trading at $73.36, while the most followed narrative pegs fair value near $91.41. This frames today’s price as a discount that rests on a long runway of regulated grid spending and data center related demand.

Xcel Energy is entering a larger infrastructure investment cycle, with a five year capital plan now above US$70b and additional opportunities identified, which can add to the regulated asset base and support future revenue and earnings.

See why 16 investors see Xcel Energy as 20% undervalued.

Result: Fair Value of $91.41 (UNDERVALUED)

Still, the Xcel Energy story can break if wildfire liabilities hit the balance sheet hard, or if regulators soften support for large data center projects.

Find out about the key risks to this Xcel Energy narrative.

Another View On Xcel Energy’s Valuation

The community narrative calls Xcel Energy about 20% undervalued, yet the current P/E of 20.5x tells a tighter story. It sits above peers at 18.3x but below a fair ratio of 22.3x, which suggests investors are paying a premium while still leaving some room if sentiment shifts.

That mix of a richer P/E than the industry and a lower multiple than the fair ratio points to real valuation risk if expectations cool and some potential upside if the market edges nearer to that fair ratio. The key question is which side of that trade-off matters more for you right now: the cushion or the premium.

See what the numbers say about this price in our valuation breakdown, then weigh it against your own assumptions about Xcel Energy’s earnings path and risk appetite. See what the numbers say about this price — find out in our valuation breakdown.

For a quick visual check on how Xcel Energy is priced against the sector, review the relative P/E picture here.

Next Steps

See mixed signals in the Xcel Energy story and feel unsure which side to trust? Act while the data is fresh and weigh both sides using 3 key rewards and 2 important warning signs.

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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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