PNM
PNM Resources, Inc.
$41.77
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 56.3% above fair value
You pay
$41.77
Bear
$23.38
Fair
$26.72
Bull
$30.06
Bear
$23.38
-44.0%
$1.67 × 14x P/E
Fair
$26.72
-36.0%
$1.67 × 16x P/E
Bull
$30.06
-28.0%
$1.67 × 18x P/E
Adjust Assumptions
16.0x
1.67$
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
25.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (20 analysts)
$44.50
Divergence from AlphaVal
40%
Summary
Applying a 16x P/E to adjusted EPS of $1.67, the base-case value is $26.72 per share. DDM cross-check: $49.49.
Warnings
The company pays out 92% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $49.49 (above our primary estimate by 85%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $44.50 (from 20 analysts). Our estimate is 40% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples