Exelon Corporation (EXC)

Conclusion

Exelon Corporation is a US utility holding company. It distributes and transmits electricity and distributes natural gas to retail customers, and it is headquartered in Chicago. At 45.65 USD on 2026-11-09, its market capitalisation is 47.2 billion USD and its enterprise value is 98.97 billion USD.

The verdict is overvalued, with a margin of safety of -27.3%. The fair value band runs from 26.55 to 39.83 USD with a midpoint of 33.19 USD, against a price of 45.65 USD. Today's multiples sit above their own ten-year medians: the P/E is 17.9 against a median of 16.9, and EV/EBITDA is 11.1 against 7.5. The fair value from historical multiples is 33.19 USD. The discounted cash flow value per share is not available, and the reverse DCF is not available either, so the growth the price implies cannot be set against the growth delivered. Revenue grew at a compound rate of 8.3% over three years but fell 6.0% over five years.

What supports the case is operating margin of 19.8%, well above its ten-year median of 14.0%, and seven beats in the last eight quarters. The dividend yield of 3.6% also helps. What could break it is leverage: net debt to EBITDA of 5.78 and interest coverage of 2.26. Free cash flow conversion over the last twelve months is -98.0%, and the Altman Z-score of 0.76 sits in the distress zone.

Financial health

Financial strength is red, held back by three weak measures: Altman Z-score, net debt to EBITDA and interest coverage. The current ratio of 1.03 is neutral and the quick ratio is 0.63. Net debt to EBITDA is 5.78, debt to equity is 1.77 and interest coverage is 2.26. The Altman Z-score is 0.76, in the distress zone. The Altman model was designed for manufacturers, so this reading is only a rough guide for a utility. Insolvency risk: low, about 1.1% by the estimate of the Ohlson model over one to two years. The estimate is based on the 2025-12-31 balance sheet. Leverage is the company's main financial weakness and needs close monitoring.

Earnings quality

Earnings quality is red, because free cash flow does not cover reported earnings. Free cash flow conversion is -98.0% over the last twelve months and -120.3% over five years, and free cash flow after stock-based compensation is -2.585 billion USD. The accrual ratio is -3.1%, which is a comparatively favourable sign. Stock-based compensation is not available. The share count rose at a compound rate of 0.7% over five years, so there were no net buybacks. The Piotroski score is 5 out of 9. The Beneish M-score is not available. Seven of eight quarterly earnings beat estimates, with an average surprise of 6.1%. Current-year estimates were revised up slightly over 90 days, by 0.5%. Next-year estimates were revised down by 0.1%, with four downgrades against one upgrade in the last 30 days.

Profitability

Profitability is green, supported by the operating margin and the net margin. The operating margin is 19.8% against a ten-year median of 14.0%, and the net margin is 10.2% against a median of 10.1%. The gross margin is 20.0% against a median of 29.4%. Operating margin stability is 27.4%. ROIC is 5.25% against a WACC of 6.36%, giving a ROIC minus WACC of -1.11%, which is neutral. Returns barely cover the cost of capital. The DuPont split shows return on equity of 8.75% is built on a net margin of 11.4%, an asset turnover of 0.21 and an equity multiplier of 4.05. Much of the equity return therefore comes from leverage rather than from asset efficiency.

Growth

Growth is yellow. Revenue has a compound growth rate of 8.3% over three years, but -6.0% over five years and -1.9% over ten years. Revenue grew in seven of the ten comparable years. Earnings per share grew at a compound rate of 7.6% over three years, 6.4% over five years and 0.7% over ten years. Analysts expect next-year earnings per share growth of 5.7%. Recent growth is stronger than the long-term record, but the ten-year trend is weak and does not support a premium valuation.

Valuation

Valuation is red. The P/E is 17.9 against a ten-year median of 16.9, a premium of 6.0%. EV/EBITDA is 11.1 against 7.5, a premium of 47.1%. Price-to-sales is 1.82 against 1.33, a premium of 37.1%, and price-to-book is 1.57 against 1.14, a premium of 38.0%. The free cash flow yield is -5.5% and the earnings yield is 5.6%. The discount rate is 8.9% and the terminal growth rate is 2.5%. The discounted cash flow value per share is not available, and the reverse DCF is not available. The fair value band runs from 26.55 to 39.83 USD with a midpoint of 33.19 USD, and the fair value from historical multiples is 33.19 USD. These are estimates built on fixed assumptions, not price targets. The dividend yield is 3.6% and the forward yield is 3.7%. Payout on free cash flow is not available because free cash flow is negative.

Risks

The main risk is leverage. Net debt to EBITDA of 5.78 and interest coverage of 2.26 leave little room for higher interest costs or weaker earnings. The Altman Z-score of 0.76 points to financial stress. Negative free cash flow means dividends and investment depend on borrowing or asset sales. Returns below the cost of capital, with ROIC of 5.25% against a WACC of 6.36%, mean that growth may not create value. Stock-based compensation and the Beneish M-score are not available, so the quality of earnings cannot be checked fully. The discounted cash flow value per share and the reverse DCF are also not available. This analysis has no debt maturity schedule and no revenue by segment, so refinancing risk and the performance of individual businesses cannot be assessed.