On Wednesday, Citi reiterated a Neutral rating with a $71.00 price target on shares of Xcel Energy (NASDAQ:XEL). The firm's analysis suggests that the property damage from recent fires may be less than $500 million, which is within the range of the company's insurance coverage.
Citi's report detailed two methods used to estimate the costs associated with the damage to approximately 350 structures. The first method, a top-down approach, estimated the total value of the damaged houses at around $48 million. This figure was calculated by multiplying the number of impacted structures by the average median house prices in Texas and Oklahoma counties affected by the fires, which was approximately $137,000 as of the third quarter of 2023.
The second method, a bottom-up approach, involved calculating the percentage of households in the SPS territory that were within the path of the fires. By using computer programming to overlap the SPS territory and fire maps, and then referencing the number of households per county from the US Census Bureau, Citi estimated the total house value for the current reported damage at approximately $46 million.
The firm's analysis, which relies on data up to March 5, suggests that the financial impact of the fires on Xcel Energy's properties may be lower than initially feared. This reassessment could potentially mitigate concerns among investors regarding the financial burden of the disaster on the company.
InvestingPro Insights
Amidst ongoing evaluations of the recent wildfires' impact on Xcel Energy's finances, current data from InvestingPro offers additional context for investors. The company's market capitalization stands at $27.01 billion, with a P/E ratio of 15.21, reflecting investor perceptions of its value relative to earnings. Notably, Xcel Energy has a track record of raising its dividend, doing so for 20 consecutive years, which may reassure investors looking for stable returns in uncertain times.
InvestingPro Data indicates that Xcel Energy's revenue for the last twelve months as of Q4 2023 was $14.21 billion, with a gross profit margin of 41.77%. Despite the negative revenue growth of -7.21% over the same period, the company's ability to maintain a strong gross profit margin suggests efficient cost management. Furthermore, the dividend yield as of the latest data point stands at an attractive 4.5%, which may appeal to income-focused investors.
InvestingPro Tips highlight that while Xcel Energy operates with a significant debt burden, analysts have revised their earnings upwards for the upcoming period, which may indicate a positive outlook for the company's financial performance. Additionally, the stock is currently trading near its 52-week low, which could present a buying opportunity for value investors if they believe the stock's fundamentals remain strong.
For those seeking more in-depth analysis and additional insights, there are 12 more InvestingPro Tips available for Xcel Energy at https://www.investing.com/pro/XEL. Investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to exclusive data and expert tips to inform their investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.