Weighted
$42.75
Conviction
6.0/10
Decision
Starter long
Method
Residual income
Revised current conclusion
Bear $31.13, Base $43.62, Bull $52.62. Weighted $42.75. Expected return -7.0%. Historical original values are preserved only in labeled comparisons.
| Case | Probability | Current value | Return |
|---|---|---|---|
| Bear | 25% | $31.13 | -32.3% |
| Base | 50% | $43.62 | -5.1% |
| Bull | 25% | $52.62 | 14.5% |
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 | Distribution rate base was approximately $21.3bn at 2025-12-31; transmission rate base is tracked separately and no single frozen consolidated rate-base total is used | [1.0, 1.04, 1.08, 1.12, 1.17] | [1.0, 1.06, 1.13, 1.2, 1.28] | [1.0, 1.08, 1.17, 1.27, 1.38] |
| load | More than six million customers; management identified 6.4 GW contracted large load versus a much larger 25 GW forecast pipeline | [1.0, 1.0, 1.01, 1.02, 1.03] | [1.0, 1.01, 1.03, 1.05, 1.07] | [1.0, 1.02, 1.05, 1.09, 1.13] |
| customer rates | Jurisdiction-specific approved tariffs across OH, PA, WV, MD, NJ and NY; no valid consolidated $/MWh shortcut | [1.0, 1.04, 1.08, 1.12, 1.16] | [1.0, 1.05, 1.1, 1.15, 1.21] | [1.0, 1.05, 1.11, 1.17, 1.23] |
| authorized roe | Jurisdiction-specific authorized returns in frozen regulatory disclosures; no single consolidated allowed ROE | [0.092, 0.092, 0.092, 0.092, 0.092] | [0.096, 0.096, 0.096, 0.096, 0.096] | [0.1, 0.1, 0.1, 0.1, 0.1] |
| earned roe | Market snapshot ROE 9.491%; FY2025 attributable earnings $1.020bn versus average common equity indicates a lower GAAP return because of legacy and non-operating items | [0.086, 0.087, 0.088, 0.089, 0.09] | [0.096, 0.097, 0.098, 0.099, 0.1] | [0.101, 0.103, 0.104, 0.105, 0.106] |
| regulatory lag | Formula transmission recovery is faster; state distribution cases introduce mixed lag; no consolidated reported month figure | [14, 14, 13, 13, 12] | [10, 9, 9, 8, 8] | [7, 7, 6, 6, 5] |
| operating expenses | FY2025 GAAP operating expenses $12.884bn, including pass-through fuel and purchased power | [1.0, 1.045, 1.09, 1.14, 1.19] | [1.0, 1.035, 1.07, 1.105, 1.14] | [1.0, 1.025, 1.05, 1.08, 1.11] |
| eps operating earnings | $2.72 midpoint of reaffirmed 2026 core EPS guidance range $2.62-$2.82 | [2.829, 2.942, 3.06, 3.182, 3.309] | [2.91, 3.114, 3.332, 3.565, 3.815] | [2.951, 3.202, 3.474, 3.769, 4.09] |
| capex | FY2025 capital expenditure $4.705bn; funded 2025-2029 capital plan approximately $36bn | [6.5, 6.7, 6.8, 6.9, 7.0] | [7.0, 7.2, 7.4, 7.6, 7.8] | [7.2, 7.5, 7.8, 8.1, 8.4] |
| depreciation | FY2025 GAAP depreciation $1.664bn; H1 2026 $0.845bn | [1.7, 1.77, 1.85, 1.93, 2.01] | [1.7, 1.8, 1.91, 2.02, 2.14] | [1.7, 1.82, 1.95, 2.09, 2.24] |
| working capital | No isolated guidance series; fuel recovery, receivables, storms and construction timing drive the bridge | [0.35, 0.4, 0.45, 0.5, 0.55] | [0.25, 0.3, 0.3, 0.35, 0.35] | [0.15, 0.2, 0.25, 0.25, 0.3] |
| taxes | FY2025 GAAP tax expense $0.288bn on $1.559bn pretax income; H1 2026 $0.230bn on $1.048bn pretax income | [0.19, 0.19, 0.2, 0.2, 0.21] | [0.2, 0.2, 0.21, 0.21, 0.22] | [0.21, 0.21, 0.22, 0.22, 0.23] |
| debt | At 2026-06-30: $27.102bn noncurrent long-term obligations, $0.505bn current long-term debt and $1.376bn short-term borrowings | [30.5, 32.5, 34.5, 36.5, 38.5] | [30.0, 31.5, 33.0, 34.5, 36.0] | [29.5, 30.5, 31.5, 32.5, 33.5] |
| equity issuance dilution | 578.640m common shares outstanding at 2026-06-30; 580m H1 diluted weighted-average shares | [581, 584, 587, 590, 593] | [580, 581, 582, 583, 584] | [579, 579, 580, 581, 582] |
| dividend growth payout | Annualized dividend $1.86 from the $0.465 quarterly declaration, 68.4% of $2.72 guidance midpoint | [0.72, 0.72, 0.72, 0.72, 0.72] | [0.68, 0.68, 0.68, 0.68, 0.68] | [0.64, 0.64, 0.64, 0.64, 0.64] |
| cost of equity | Frozen reverse model used 9%; reassessed around a low-beta regulated wires utility with jurisdiction, duration and governance risk | [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 | Common book value $12.935bn / 578.640m shares = $22.354 BVPS at 2026-06-30 | {'ri_growth': 0, 'payout': 0.72} | {'ri_growth': 0.02, 'payout': 0.68} | {'ri_growth': 0.025, 'payout': 0.64} |
Scorecard
| Pillar | Original | Revised |
|---|---|---|
| business quality | 6.8 | 6.8 |
| management quality | 7.2 | 7.2 |
| industry tailwind | 8.3 | 8.3 |
| valuation | 7.8 | 4.0 |
| risk asymmetry | 6.2 | 4.5 |
Conviction 7.325 to 6.015. Valuation and Risk change only because documented rubric bands changed.