Xcel Energy Inc (XEL)

Conclusion

Xcel Energy is a US regulated electric and natural gas utility serving customers in parts of eight states, headquartered in Minneapolis. The shares were priced at 80.17 USD on 9 November 2026, giving a market capitalisation of 51.46 billion USD and an enterprise value of 91.69 billion USD.

The verdict is fair. The fair value band runs from 63.89 to 95.84 USD with a midpoint of 79.87 USD, a margin of safety of -0.4% at the current price. The trailing P/E of 19.28 sits below its ten-year median of 21.36, a premium of -9.8%, while EV/EBITDA of 12.83 is a premium of 3.7% to its median of 12.37. The DCF per-share value and the growth implied by the price (reverse DCF) are not available, so the price cannot be checked against a computed growth expectation. Analysts estimate next-year EPS growth at 10.3%, against a five-year EPS compound growth of 4.2%.

The strongest numbers are the operating margin of 21.7% against a ten-year median of 18.0%, the net margin of 17.9% against 11.9%, and the dividend yield of 2.72%. The weakest are net debt to EBITDA of 5.63, interest coverage of 2.60, and free cash flow conversion of -285.4% over the trailing twelve months. ROIC of 6.18% also sits below a WACC of 7.06%, so the returns earned do not yet clear the cost of capital.

Financial health

Financial strength is red, because every health measure with an assessment is rated bad. The current ratio is 0.69 and the quick ratio 0.48, so short-term liquidity is thin. Net debt to EBITDA is 5.63, debt to equity is 1.68 and interest coverage is 2.60, leaving a narrow buffer over interest costs. The Altman Z-score of 0.90 falls in the distress zone, although the model was designed for manufacturers and Xcel is a utility. Insolvency risk: low, about 1.1% by the estimate of the Ohlson model over one to two years, based on 2025 year-end figures. The low estimate contrasts with the weak balance sheet ratios, so the leverage deserves close watching.

Earnings quality

Earnings quality is red, with free cash flow conversion the main drag. Conversion is -285.4% over the trailing twelve months and -141.7% over five years, and free cash flow after stock-based compensation is -7.66 billion USD. The accrual ratio is -2.7% and stock-based compensation is 0.3% of revenue, both small. Over five years the share count has grown 2.2% a year, so there are no net buybacks. The Piotroski score is 5 out of 9. The Beneish M-score is not available. Over the last eight quarters the company beat estimates three times and missed three times, with an average surprise of 2.7%. Estimates for the current year rose in six of the last 30 days' revisions, while next-year estimates were cut more often (six down, four up).

Profitability

Profitability is green, led by margins that sit above their own history. The gross margin is 49.5% against a ten-year median of 40.3%, the operating margin 21.7% against 18.0%, and the net margin 17.9% against 11.9%. Operating margin stability is 7.1%. The return on invested capital is 6.18% against a WACC of 7.06%, and the given ROIC minus WACC value is -0.9%, so value creation is not yet evident. The five-year median ROIC is 5.8%. Return on equity is 10.5%, but the DuPont split shows that leverage plays a large part: a net margin of 13.8%, an asset turnover of 0.18 and an equity multiplier of 3.45, all from 2025 year-end figures.

Growth

Growth is yellow, with steady but modest expansion. Revenue compound growth is -1.4% over three years, 4.9% over five years and 2.9% over ten years. EPS compound growth is 2.6% over three years, 4.2% over five years and 5.9% over ten years. Revenue grew in six of the ten comparable years. The growth outlook rests on next-year EPS growth estimated at 10.3%, a figure that is above the historical record, so it depends on delivery.

Valuation

Valuation is yellow, with the price close to the fair value midpoint. The current P/E of 19.28 is below its median of 21.36 (premium -9.8%), EV/EBITDA of 12.83 is above its median of 12.37 (premium 3.7%), price to sales of 3.46 is above its median of 2.53 (premium 36.8%) and price to book of 2.02 is below its median of 2.13 (premium -5.3%). Price to free cash flow is not available, and the free cash flow yield is -14.8%. The DCF uses a discount rate of 8.87% and terminal growth of 2.5%, but its per-share value is not available. The fair value band is built on fixed assumptions and is an order of magnitude, not a price target. The dividend yield is 2.72% and the forward yield 2.97%. A payout ratio on free cash flow is not meaningful while free cash flow is negative. The company reports in USD.

Risks

Leverage is the main risk. Net debt of 5.63 times EBITDA and interest coverage of 2.60 mean that higher rates or weaker earnings would quickly squeeze cash available for interest. A current ratio of 0.69 means short-term obligations exceed liquid assets. Negative free cash flow implies that capital spending and dividends are funded by borrowing or new equity, and the rising share count is consistent with this. ROIC below WACC means returns do not yet cover the cost of capital. Next-year estimate revisions lean downward. Several values are not available: the Beneish M-score, the DCF per-share value, the reverse DCF implied growth and price to free cash flow. This analysis has no debt maturity schedule and no revenue by segment, so refinancing risk and the mix of regulated businesses cannot be judged.