Duke Energy Corporation (DUK)

Conclusion

Duke Energy is a US utility that generates, transmits and sells electricity in the Southeast and Midwest and distributes natural gas. At a price of 128.38 USD on 2 November 2026, its market capitalisation is 100.10 billion USD and its enterprise value is 190.66 billion USD.

The verdict is fair. The fair value band runs from 102.38 to 153.56 USD with a midpoint of 127.97 USD, giving a margin of safety of -0.3% at the current price. The fair value from historical multiples is also 127.97 USD. Against their own ten-year medians, the price-to-earnings ratio of 19.08 sits at a premium of -9.4% (median 21.05) and EV/EBITDA of 10.90 at -8.7% (median 11.94), while price-to-book of 1.83 is at a premium of 23.9% (median 1.48). A discounted cash flow value and the growth implied by the price (reverse DCF) are not available, because free cash flow is negative. Over the last five years, earnings per share grew 27.93% a year and revenue 6.65% a year.

What holds the case up: an operating margin of 27.6% against a ten-year median of 22.82%, revenue growth in nine of ten comparable years, and seven earnings beats in eight quarters. What would break it: free cash flow conversion of -81.5% over the last twelve months, net debt to EBITDA of 5.18, and an Altman Z-score of 0.74 alongside a current ratio of 0.66.

Financial health

Financial strength is red, because all four measured signals are assessed bad. The current ratio is 0.66 and the quick ratio 0.26, so liquid assets cover only part of short-term obligations. Net debt to EBITDA is 5.18, interest coverage is 2.58 and debt to equity is 1.67. The Altman Z-score of 0.74 falls in the distress zone, but the Altman model was designed for manufacturers, and Duke is a utility, so this reading needs caution. The insolvency risk is low, about 0.85% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is red, with one signal assessed bad and two neutral. Free cash flow conversion is -81.5% over twelve months and -60.8% over five years, and free cash flow after stock-based compensation is -4.27 billion USD. Stock-based compensation is not available, so that figure is the only adjusted one. The accrual ratio is -0.0387. The share count has risen 1.04% a year over five years, so there are no net buybacks. The Piotroski score is 6 of 9. The Beneish M-score is not available. The company beat earnings estimates in seven of the last eight quarters, with an average surprise of 4.31%. Next-year estimates moved 0.02% over 90 days, and next-year growth is estimated at 6.65%.

Profitability

Profitability is green, with three good signals and one neutral. The operating margin is 27.6% against a ten-year median of 22.82%, and the net margin is 15.72% against 12.35%. The gross margin is 68.19% against 45.76%, and operating margin stability is 10.64%. ROIC is 5.96% against a WACC of 6.74%, a ROIC minus WACC value of -0.78%, which is neutral. The five-year median ROIC is 5.34%. Return on equity is 9.58%. The DuPont split shows a net margin of 15.41%, an asset turnover of 0.1647 and an equity multiplier of 3.78, so borrowing lifts the return on equity considerably.

Growth

Growth is green, with two good signals and two neutral. Revenue compound growth is 3.87% over three years, 6.65% over five and 3.72% over ten. Earnings per share compound growth is 24.52% over three years, 27.93% over five and 4.49% over ten. Revenue grew in nine of ten comparable years. The five-year earnings record is well above the ten-year figure, so the recent pace is not the long-run norm.

Valuation

Valuation is yellow, with a neutral verdict of fair. The price-to-earnings ratio of 19.08 is at a premium of -9.4% to its median of 21.05, and EV/EBITDA of 10.90 is at -8.7% to its median of 11.94. Price-to-sales of 3.00 is at a premium of 12.3% to its median of 2.67, and price-to-book of 1.83 at 23.9% to 1.48. The discounted cash flow value is not available, because free cash flow is negative; its inputs are a discount rate of 8.91% and long-term growth of 2.5%. The reverse DCF implied growth is not available either. The fair value band is an order of magnitude built on fixed assumptions, not a price target. The dividend yield is 4.14% and the forward yield 3.45%. A payout on free cash flow is not meaningful while free cash flow is negative.

Risks

The weakest numbers point to specific pressures. Liquidity is thin, with a current ratio of 0.66 and a quick ratio of 0.26, so any large near-term payment would have to come from outside cash. Net debt of 5.18 times EBITDA and interest coverage of 2.58 leave little room if interest costs rise or earnings fall. Negative free cash flow of -4.27 billion USD after stock-based compensation means investment and dividends are not covered internally. Rising share count dilutes per-share value. Not available: the discounted cash flow value, the reverse DCF implied growth, stock-based compensation, the Beneish M-score and the price-to-free-cash-flow ratio. This analysis has no debt maturity schedule and no revenue by segment, so it cannot test refinancing risk or the mix of regulated and gas earnings.