Long-established in the Utilities - Regulated industry, Exelon Corp (EXC, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.38%, juxtaposed with a three-month change of 9.94%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Exelon Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 3/10
- Profitability rank: 7/10
- Growth rank: 3/10
- GF Value rank: 7/10
- Momentum rank: 4/10
Based on the above method, GuruFocus assigned Exelon Corp the GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding Exelon Corp's Business
Exelon Corp, with a market cap of $37.80 billion and sales of $21.73 billion, operates with an operating margin of 18.48%. The company serves approximately 10 million power and gas customers at its six regulated utilities in Illinois, Pennsylvania, Maryland, New Jersey, Delaware, and Washington, D.C. This snapshot of Exelon Corp's business operations and history provides a backdrop for understanding its financial and growth metrics.
Financial Strength Breakdown
Exelon Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 2.32 positions it worse than 73.08% of 442 companies in the Utilities - Regulated industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The Altman Z-Score of just 0.71, which is below the distress zone of 1.81, suggests that the company may face financial distress over the next few years. Furthermore, the company's low cash-to-debt ratio at 0.01 indicates a struggle in handling existing debt levels. The debt-to-Ebitda ratio is 5.54, which is above Joel Tillinghast's warning level of 4 and is worse than 70.43% of 460 companies in the Utilities - Regulated industry.
Growth Prospects
A lack of significant growth is another area where Exelon Corp seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by an average of 13.6% per year over the past three years, which underperforms worse than 95.34% of 494 companies in the Utilities - Regulated industry. Over the past five years, Exelon Corp has witnessed a decline in its EBITDA, with a three-year growth rate of -9.5 and a five-year growth rate of -7.5. Lastly, Exelon Corp's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Considering Exelon Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. With a GF Score of 69, the company's future outperformance potential is in question, especially when considering the financial and growth challenges it faces. Investors should weigh these factors carefully when considering Exelon Corp as part of their investment portfolio.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
