Eversource Energy (ES)

Conclusion

Eversource Energy is a US regulated utility holding company. It delivers electricity and natural gas and provides water services in Connecticut, Massachusetts and New Hampshire. At a price of 69.49 USD on 9 November 2026, the market capitalisation is 26.2 billion USD and the enterprise value is 54.5 billion USD.

The verdict is undervalued. Today's P/E of 18.3 sits below its ten-year median of 21.4, and EV/EBITDA of 10.8 sits below 12.5. The DCF gives 152.25 USD per share at a discount rate of 8.9%, and the fair value from historical multiples is 90.06 USD. The fair value band runs from 96.92 to 145.39 USD with a midpoint of 121.16 USD, giving a margin of safety of 74.4%. The reverse DCF implies revenue growth of -5.7% a year, while revenue actually grew at 8.75% a year over five years. That gap is why the verdict is favourable, but the DCF depends heavily on its terminal value and should be read with caution.

The case rests on three numbers: revenue growth of 8.75% over five years, an operating margin of 22.31% against a ten-year median of 21.14%, and a dividend yield of 4.39% with a payout on free cash flow of 38.31%. It would break on three weak numbers: net debt to EBITDA of 5.62x, interest coverage of 2.34x, and ROIC of 5.92% sitting below a WACC of 6.60%. The current ratio of 0.76 and the Altman Z-score of 0.85 add to the balance sheet pressure.

Financial health

Financial strength is red, held back by weak balance sheet measures and supported by none of the assessed metrics. The current ratio is 0.76 and the quick ratio is 0.29, both below comfortable levels. Net debt to EBITDA is 5.62x and interest coverage is 2.34x, while debt to equity stands at 1.27. The Altman Z-score is 0.85, in the distress zone; the Altman model was designed for manufacturers, so this reading is only indicative for a utility. Insolvency risk: low, about 1.3% by the estimate of the Ohlson model over one to two years. Debt has grown by 2.1% a year over five years relative to revenue, which is modest, but the leverage ratios leave little room for error.

Earnings quality

Earnings quality is red, because cash generation has been inconsistent. Free cash flow conversion is 2.10x on a trailing twelve-month basis, but it was -1.30x on a five-year basis, so the trailing figure reflects a recent recovery rather than a steady pattern. The accrual ratio is 0.84%, which is low and points to cash-backed earnings. Free cash flow after stock-based compensation is 3.00 billion USD. Stock-based compensation is not available, so its share of revenue cannot be given. The share count has risen by 1.78% a year over five years, so shareholders have been diluted rather than bought back. The Piotroski score is 5 out of 9. The Beneish M-score is not available. The company beat earnings estimates in 5 of the last 8 quarters, with an average surprise of 0.94%. Current-year estimates have been cut, with 5 downgrades and no upgrades in the last 30 days.

Profitability

Profitability is green, supported by a strong operating margin. The operating margin is 22.31%, above its ten-year median of 21.14%, and the net margin is 10.38% against a median of 12.28%. The gross margin is 29.67% against a median of 47.6%, a difference that reflects how utilities report costs and should not be read as a weakness on its own. The ROIC is 5.92%, close to its five-year median of 5.72%, but below the WACC of 6.60%, giving a given ROIC minus WACC value of -0.68%. The DuPont split shows a net margin of 12.49%, an asset turnover of 0.21 and an equity multiplier of 3.94. Return on equity is 6.28%, and most of it comes from leverage rather than from returns on the asset base.

Growth

Growth is green, driven by the five-year record. Revenue has compounded at 3.3% over three years, 8.75% over five years and 5.47% over ten years. Earnings per share have compounded at 4.06% over three years, 5.15% over five years and 5.15% over ten years. Revenue grew in 7 of the 10 comparable years. Analysts expect next-year earnings growth of 5.6%, but that estimate has been cut slightly over the last 90 days, with one upgrade and five downgrades in the last 30 days. The recent three-year pace is slower than the five-year figure, so growth has been decelerating.

Valuation

Valuation is green, because most multiples sit below their ten-year medians. The P/E is 18.3 against a median of 21.4, a premium of -14.5%. EV/EBITDA is 10.8 against a median of 12.5, a premium of -13.4%. Price to sales is 1.90 against 2.42, a premium of -21.3%, and price to book is 1.15 against 1.76, a premium of -34.6%. There is no usable ten-year median for price to free cash flow, which is 8.7. The free cash flow yield is 11.5% and the earnings yield is 5.5%. The DCF gives 152.25 USD per share at a discount rate of 8.9%, with terminal value making up 56.4% of the total. The fair value from historical multiples is 90.06 USD. The fair value band of 96.92 to 145.39 USD is an order-of-magnitude estimate built on fixed assumptions, not a price target. The reverse DCF implies growth of -5.71%, against revenue growth of 8.75% over five years. The dividend yield is 4.39% and the forward yield is 4.51%, with a payout of 38.31% of free cash flow.

Risks

The main risk is leverage. A net debt to EBITDA of 5.62x and interest coverage of 2.34x leave little room if borrowing costs rise or earnings fall, and a current ratio of 0.76 means short-term obligations exceed liquid assets. Weak cash conversion over five years, with a figure of -1.30x, means that earnings have not reliably turned into free cash flow. Continued share issuance at 1.78% a year would dilute per-share returns. ROIC below WACC means that new investment is not yet earning its cost of capital. Values not available include stock-based compensation, the Beneish M-score and a usable ten-year median for price to free cash flow. This analysis does not include a debt maturity schedule or revenue by segment, so refinancing risk and the mix of regulated businesses cannot be assessed. The DCF and the reverse DCF depend on fixed assumptions, and the valuation conclusion is only as reliable as those assumptions.