Weighted
$128.51
Conviction
5.9/10
Decision
Starter long
Method
Residual income
Revised current conclusion
Bear $92.21, Base $131.11, Bull $159.62. Weighted $128.51. Expected return -5.0%. Historical original values are preserved only in labeled comparisons.
| Case | Probability | Current value | Return |
|---|---|---|---|
| bear | 25% | $92.21 | -31.8% |
| base | 50% | $131.11 | -3.0% |
| bull | 25% | $159.62 | 18.0% |
Company-specific method
Five-year clean-surplus residual income. Opening common book value, EPS, payout, dilution, earned-return spread and cost of equity are explicit. Dividend discount, rate-base earnings power, SOTP, justified P/E and EV/rate-base remain cross-checks.
Formula: BVPS plus present value of residual income, where residual income equals EPS minus cost of equity times opening BVPS.
Current to Bear, Base and Bull bridges
| Variable | Current | Bear | Base | Bull |
|---|---|---|---|---|
| rate base | DTE Electric $24.0bn and DTE Gas $4.2bn projected 2026 year-end rate base; combined $28.2bn | [28.2, 29.3, 30.5, 31.7, 33.0] | [28.2, 30.2, 32.3, 34.6, 37.0] | [28.2, 30.6, 33.2, 36.0, 39.1] |
| electric load | 2025 weather-normalized retail electric sales baseline indexed to 1.00 | [1, 1.0, 1.01, 1.02, 1.03] | [1, 1.01, 1.02, 1.03, 1.04] | [1, 1.015, 1.03, 1.045, 1.06] |
| gas load | 2025 weather-normalized gas deliveries baseline indexed to 1.00 | [1, 0.995, 0.99, 0.985, 0.98] | [1, 1, 1, 1, 1] | [1, 1.002, 1.004, 1.006, 1.008] |
| customer rates | Michigan filed tariffs; no single consolidated electric/gas rate | [1, 1.04, 1.08, 1.12, 1.16] | [1, 1.05, 1.1, 1.15, 1.21] | [1, 1.055, 1.115, 1.18, 1.25] |
| authorized roe | DTE Electric 9.9%; DTE Gas 9.8% in frozen regulatory evidence | [0.098, 0.098, 0.098, 0.098, 0.098] | [0.099, 0.099, 0.099, 0.099, 0.099] | [0.1, 0.1, 0.1, 0.1, 0.1] |
| earned roe | Normalized starting range near authorized ROE; exact consolidated utility earned ROE not a GAAP line | [0.09, 0.09, 0.091, 0.092, 0.092] | [0.097, 0.098, 0.098, 0.099, 0.099] | [0.101, 0.102, 0.102, 0.103, 0.103] |
| regulatory lag | Mixed formula rates, riders and litigated state cases; exact consolidated months unavailable | [12, 13, 14, 14, 15] | [9, 9, 8, 8, 8] | [7, 6, 6, 5, 5] |
| operating expenses | FY2025 GAAP operation and maintenance $2.382bn; total operating expenses $13.440bn | [1, 1.04, 1.08, 1.12, 1.16] | [1, 1.035, 1.07, 1.105, 1.14] | [1, 1.03, 1.06, 1.09, 1.12] |
| eps operating earnings | $8.3665 frozen forward EPS proxy | [8.701, 9.049, 9.411, 9.788, 10.179] | [8.952, 9.578, 10.248, 10.965, 11.734] | [9.078, 9.85, 10.687, 11.596, 12.582] |
| capex | FY2025 utility capex $4.343bn and non-utility capex $0.086bn | [4.7, 4.8, 4.9, 5.0, 5.1] | [5.0, 5.2, 5.4, 5.6, 5.8] | [5.2, 5.5, 5.8, 6.1, 6.4] |
| depreciation | FY2025 depreciation and amortization $1.841bn; H1 2026 $0.981bn | [1.95, 2.04, 2.13, 2.22, 2.31] | [1.98, 2.1, 2.22, 2.35, 2.48] | [2.0, 2.14, 2.29, 2.45, 2.62] |
| working capital | No isolated valuation shortcut; fuel under/over-recovery and construction timing dominate | [0.4, 0.5, 0.6, 0.7, 0.8] | [0.3, 0.3, 0.4, 0.4, 0.5] | [0.3, 0.4, 0.5, 0.6, 0.7] |
| taxes | FY2025 GAAP income tax expense $0.088bn; H1 2026 benefit $0.099bn | [0.16, 0.17, 0.18, 0.19, 0.2] | [0.18, 0.19, 0.2, 0.21, 0.22] | [0.19, 0.2, 0.21, 0.22, 0.23] |
| debt | 2026-06-30 debt due within one year $1.689bn plus long-term debt $25.895bn | [27.6, 29.0, 30.5, 32.0, 33.5] | [27.6, 29.4, 31.2, 33.0, 34.8] | [27.6, 29.2, 30.8, 32.4, 34.0] |
| equity issuance dilution | 2026-06-30 shares outstanding 208.088m; 2025 issuance 0.264m plus compensation 0.309m | [208.1, 208.8, 209.5, 210.2, 210.9] | [208.1, 208.5, 208.9, 209.3, 209.7] | [208.1, 208.3, 208.5, 208.7, 208.9] |
| dividend growth payout | 2025 declared dividend $4.44/share; approximately 53.1% of frozen $8.3665 EPS proxy | [0.6, 0.6, 0.6, 0.6, 0.6] | [0.55, 0.55, 0.55, 0.55, 0.55] | [0.52, 0.52, 0.52, 0.52, 0.52] |
| cost of equity | Reassessed from regulated utility duration, Michigan jurisdiction and financing sensitivity | [0.095, 0.095, 0.095, 0.095, 0.095] | [0.085, 0.085, 0.085, 0.085, 0.085] | [0.08, 0.08, 0.08, 0.08, 0.08] |
| terminal economics and payout | Clean-surplus book $58.383934/share; terminal residual income depends on earned ROE versus cost of equity | {'ri_growth': 0, 'payout': 0.6} | {'ri_growth': 0.02, 'payout': 0.55} | {'ri_growth': 0.025, 'payout': 0.52} |
Scorecard
| Pillar | Original | Revised |
|---|---|---|
| business quality | 6.9 | 6.9 |
| management quality | 7.5 | 7.5 |
| industry tailwind | 8.0 | 8.0 |
| valuation | 7.0 | 4.0 |
| risk asymmetry | 6.5 | 3.5 |
Conviction 7.520 to 5.945. Valuation and Risk change only because documented rubric bands changed.