Dominion Energy Inc (D)

Conclusion

Dominion Energy is a US regulated electricity and natural gas utility, serving customers in Virginia, North Carolina and South Carolina, with about 30.7 GW of generating capacity. At a price of 68.24 USD on 2026-11-09, the market capitalisation is 60.0 billion USD and the enterprise value is 111.6 billion USD.

The verdict is fair. Today's price-to-earnings ratio of 22.2 is a premium of 7.5% to its ten-year median of 20.6, while EV/EBITDA of 14.5 is a discount of 2.9% to its median of 15.0. The fair value band runs from 57.22 to 85.84 USD with a midpoint of 71.53 USD, giving a margin of safety of 4.8% at the current price. A discounted cash flow value is not available, because free cash flow is negative, so the growth implied by the price cannot be set against delivered growth. Revenue grew at 3.1% a year over five years and 5.8% over three.

What holds the case up: a dividend yield of 3.9%, an operating margin of 26.3% against a median of 23.1%, and a Piotroski score of 7 of 9. What would break it: net debt to EBITDA of 6.7x, interest coverage of 2.4x, and free cash flow conversion of -2.32 over the last twelve months.

Financial health

Financial strength is red, held back by leverage and coverage rather than liquidity. Net debt to EBITDA is 6.7x, interest coverage is 2.4x, and the Altman Z-score is 0.71, all assessed as bad. The current ratio of 0.88 is neutral and the quick ratio is 0.40, while debt to equity is 1.77x. The Altman model was designed for manufacturers, not utilities, so its distress reading must be treated with caution. Insolvency risk: low, about 0.85% by the estimate of the Ohlson model over one to two years. The company does not report its interest expense in full, so the coverage figure should be read as given.

Earnings quality

Earnings quality is yellow: the Piotroski score and earnings surprises are good, but cash conversion is poor. Free cash flow conversion is -2.32 over the last twelve months and -2.06 over five years, and free cash flow after stock-based compensation is -6.28 billion USD. The accrual ratio of -0.02 is mildly favourable. Stock-based compensation is not available, so its share of revenue cannot be stated. Share count has risen at 0.58% a year over five years, so there have been no net buybacks. The Beneish M-score is not available. The company beat estimates in 7 of the last 8 quarters, with an average surprise of 8.4%. Current-year estimates have seen 3 downward revisions and no upward ones in the last 30 days.

Profitability

Profitability is green, with margins above their medians, but returns on capital are close to the cost of capital. The gross margin is 54.7% against a median of 47.7%, the operating margin is 26.3% against 23.1%, and the net margin is 13.9% against 16.4%, which is below its median. ROIC is 5.7% against a WACC of 6.7%, and the given ROIC minus WACC value is -0.98 percentage points, rated neutral. The five-year median ROIC is 5.1%. Return on equity is 9.2%. The DuPont split for 2025 shows a net margin of 18.2%, an asset turnover of 0.14 and an equity multiplier of 3.98, so leverage is doing much of the work in the equity return.

Growth

Growth is green, driven by recent earnings gains rather than long-run revenue growth. Revenue compounded at 5.8% over three years, 3.1% over five years and 3.5% over ten years. Earnings per share compounded at 35.0% over three years but only 0.9% over ten years, so the recent rise is a sharp rebound. Revenue grew in 7 of the last 10 comparable years. Next-year earnings growth is estimated at 6.2%, with a 90-day revision of 0.03%, which is neutral.

Valuation

Valuation is yellow, with no assessed signal beyond the fair verdict. The price-to-earnings ratio of 22.2 is a premium of 7.5% to its median of 20.6, and EV/EBITDA of 14.5 is a discount of 2.9% to its median of 15.0. Price-to-sales of 3.09 is a discount of 21.7% to its median of 3.95, and price-to-book of 2.03 is a discount of 3.8% to its median of 2.11. The discounted cash flow value is not available. The fair value from historical multiples is 71.53 USD, which is also the midpoint of the fair value band, and the margin of safety is 4.8%. Growth implied by the price cannot be derived from the given data. The dividend yield is 3.9% and the forward yield is 4.0%; the payout on free cash flow is not meaningful because free cash flow is negative. The fair value is an estimate from historical multiples, not a price target.

Risks

The main risk is leverage: net debt to EBITDA of 6.7x and interest coverage of 2.4x leave little room if earnings or borrowing costs move against the company. Negative free cash flow means the dividend, currently yielding 3.9%, is funded from outside operating cash flow, so a cut in earnings would press on payouts. Weak conversion of earnings into cash makes reported profit a less reliable guide. Return on invested capital sits just below the cost of capital, so growth adds little value unless returns improve. Stock-based compensation, the Beneish M-score and the discounted cash flow value are not available. This analysis has no debt maturity schedule and no revenue split by segment, so refinancing risk and the contribution of each business cannot be assessed.