In this video, Chuck Carnevale, co-founder of FAST Graphs, aka Mr. Valuation analyzes Eversource Energy (ES), for Income and Total Return, a New England-based utility known for its consistent earnings and dividend growth. With a dividend increasing at nearly 8% annually and a current yield of 4.6%, the stock offers strong income potential. Historically valued at premium P/E ratios (~18), Eversource now trades at a lower P/E (~14), presenting a rare value opportunity.
Despite some temporary earnings pressure from investments in renewable energy and high capital expenditures, core fundamentals remain strong. The company has delivered steady 5–6% earnings growth since 2006, with forecasts expecting more of the same. Its analyst scorecard shows 100% accuracy on 1- and 2-year estimates, reinforcing its predictability.
While return on equity temporarily turned negative in 2023 due to one-time charges, cash flow remains healthy and covers dividends comfortably. If the stock returns to fair value or regains its premium valuation, investors could see total returns of 12–25% annually over the next few years. Chuck positions Eversource as a high-quality, income-focused investment with upside potential, especially appealing for long-term, conservative investors.
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Disclosure: Long ES
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.
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