Dominion Energy (D, Financial) experienced a stock price decline of 4.19% today, with shares trading at $53.96. This drop follows the company's update on the Coastal Virginia Offshore Wind (CVOW) project, where it revealed that project costs are expected to exceed initial estimates.
The CVOW project is approximately 50% complete and remains on track to be finalized by the end of 2026. However, the total projected costs have increased by 9%, rising from $9.8 billion to $10.7 billion. This escalation is attributed to higher network upgrade costs mandated by PJM, the regional electric grid operator.
To manage these increased costs, Dominion Energy has secured an equity financing commitment from Stonepeak. This agreement involves Stonepeak funding up to 50% of project costs, capping at $11.3 billion.
Despite these financial adjustments, residential customer bills are only expected to increase by $0.43 per 1,000 kilowatt-hours per month, which will not fully cover the additional expenses incurred by the CVOW project.
Dominion Energy has confirmed its 2025 non-GAAP operating EPS guidance and long-term growth rate prediction of 5% to 7%. Nonetheless, the company will face a $100 million GAAP charge related to unrecovered project costs. Investors look forward to additional insights during the upcoming fourth-quarter earnings report scheduled for February 12.
In terms of stock valuation, Dominion Energy’s (D, Financial) GF Value is estimated to be $58.87, indicating that the stock is currently fairly valued. The company's PE ratio stands at 18.93, which is close to its one-year low, suggesting some level of value attractiveness. Dominion's price-to-book ratio is 1.73, reflecting its relative market valuation.
Despite recent financial pressures, Dominion Energy’s operating margin is showing signs of expansion. However, financial strength concerns persist, as highlighted by its Altman Z-Score of 0.72, placing it in the distress zone with a potential bankruptcy risk within two years.
For investors, the dividend yield of Dominion Energy (D, Financial) is close to its two-year low, but the current yield remains at 4.96%. The stock's GF Score, reflecting its overall performance, stands at 82, indicating a strong relative position in the market. For more details on Dominion Energy’s valuation, visit their GF Value page.
