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TXNM Energy (TXNM)
NYSE:TXNM
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TXNM Energy
(NYSE:TXNM)
75Outperform
Positive Factors
Earnings Growth
The growth outlook is solid with a bullish EPS growth expectation of 7-9%.
Investment Opportunities
Upside to the plan includes additional transmission and generation capex opportunities in both TX and NM.
Regulatory Success
TXNM's regulatory success is highlighted as a key driver of growth.
Negative Factors
Financial Constraints
The balance sheet is somewhat constrained with weak credit metrics, requiring equity-like debt securities and common equity issuances to support the growth plan.
Wildfire Risk
Wildfire risk is acknowledged as an obstacle to achieving a higher valuation.
TXNM Energy (TXNM) vs. S&P 500 (SPY)
Market Cap
$4.64B
Dividend Yield3.14%
Average Volume (3M)1.42M
Price to Earnings (P/E)18.7
Beta (1Y)0.21
Revenue Growth1.65%
EPS Growth162.78%
CountryUS
Employees1,695
SectorUtilities
Sector Strength90
IndustryRegulated Electric
Share Statistics
EPS (TTM)2.67
Shares Outstanding92,659,330
10 Day Avg. Volume1,436,325
30 Day Avg. Volume1,417,208
Financial Highlights & Ratios
PEG Ratio0.12
Price to Book (P/B)N/A
Price to Sales (P/S)2.54
Price to Cash Flow (P/CF)7.90
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$54.71Price Target Upside5.76% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
TXNM Energy Business Overview & Revenue Model
Company DescriptionTXNM Energy (TXNM) is a prominent player in the energy sector, focusing on the exploration, production, and distribution of renewable energy resources. The company primarily operates within the solar and wind energy markets, providing sustainable energy solutions to both residential and commercial customers. TXNM Energy is committed to driving innovation and sustainability in the energy industry through its advanced technology and environmentally-friendly practices.
How the Company Makes MoneyTXNM Energy generates revenue through multiple streams, primarily from the sale of electricity generated by its solar and wind farms. The company enters into power purchase agreements (PPAs) with utilities and large organizations, ensuring a steady flow of income over long-term contracts. Additionally, TXNM Energy offers installation and maintenance services for solar panels and wind turbines, providing an additional revenue stream. Strategic partnerships with technology firms and government incentives for renewable energy projects also contribute to the company's financial success.
TXNM Energy Financial Statement Overview
Summary
TXNM Energy demonstrates strong profitability improvements, evidenced by enhanced margins and return on equity. However, high leverage poses a risk, and consistent negative free cash flow signals ongoing cash management challenges. The company needs to focus on strengthening its balance sheet and improving cash flow sustainability.Income Statement
TXNM Energy shows a strong gross profit margin, improving from 53.9% in 2023 to 65.6% in 2024. The net profit margin increased significantly from 4.6% to 12.3%, indicating enhanced profitability. Revenue growth was modest at 1.65% from 2023 to 2024, following a decline in prior years. EBIT and EBITDA margins improved, reflecting operational efficiency gains.75
Positive
Balance Sheet
The debt-to-equity ratio remains high at 2.28 in 2024, indicating considerable leverage. However, the return on equity improved to 9.5%, suggesting better utilization of equity. The equity ratio stands at 22.7%, reflecting a moderate level of financial stability, though leverage remains a concern.68
Positive
Cash Flow
Free cash flow remains negative, although the operating cash flow to net income ratio is strong at 2.09. The free cash flow to net income ratio is negative, highlighting cash flow challenges despite operational improvements.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.97B | 1.94B | 2.25B | 1.78B | 1.52B | Gross Profit |
| 1.29B | 1.05B | 1.11B | 991.09M | 937.79M | EBIT |
| 453.49M | 231.34M | 393.76M | 308.15M | 285.28M | EBITDA |
| 931.32M | 634.58M | 682.44M | 663.84M | 639.95M | Net Income Common Stockholders |
| 242.68M | 88.35M | 170.06M | 196.36M | 173.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.50M | 2.21M | 4.08M | 1.10M | 47.93M | Total Assets |
| 11.21B | 10.25B | 9.26B | 8.67B | 7.94B | Total Debt |
| 5.80B | 4.96B | 4.37B | 3.84B | 3.44B | Net Debt |
| 5.80B | 4.96B | 4.37B | 3.84B | 3.39B | Total Liabilities |
| 8.62B | 7.84B | 7.00B | 6.43B | 5.82B | Stockholders Equity |
| 2.55B | 2.36B | 2.20B | 2.18B | 2.06B |
| Cash Flow | Free Cash Flow | |||
| -738.88M | -524.64M | -345.27M | -387.14M | -193.33M | Operating Cash Flow |
| 508.16M | 551.17M | 567.28M | 547.87M | 485.70M | Investing Cash Flow |
| -1.17B | -1.09B | -950.35M | -952.26M | -733.80M | Financing Cash Flow |
| 684.35M | 537.10M | 386.04M | 357.56M | 292.19M |
TXNM Energy Technical Analysis
Positive
51.73
Price Trends
51.39
Positive
49.61
Positive
45.23
Positive
Market Momentum
0.90
Positive
58.44
Neutral
37.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TXNM, the sentiment is Positive. The current price of 51.73 is below the 20-day moving average (MA) of 52.82, above the 50-day MA of 51.39, and above the 200-day MA of 45.23, indicating a neutral trend. The MACD of 0.90 indicates Positive momentum. The RSI at 58.44 is Neutral, neither overbought nor oversold. The STOCH value of 37.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TXNM.
TXNM Energy Risk Analysis
TXNM Energy disclosed 30 risk factors in its most recent earnings report. TXNM Energy reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
TXNM Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $4.64B | 18.73 | 9.89% | 3.14% | 1.65% | 162.78% | |
74 Outperform | $6.20B | 20.88 | 9.27% | 2.93% | 3.48% | 6.67% | |
74 Outperform | $4.56B | 13.85 | 8.80% | 4.80% | 15.67% | 29.07% | |
68 Neutral | $4.34B | 28.71 | 3.23% | 7.01% | -17.27% | -77.67% | |
65 Neutral | $11.75B | 15.50 | 6.20% | 4.60% | 5.53% | -8.93% | |
63 Neutral | $1.93B | 28.16 | 3.52% | 3.58% | -14.28% | -85.93% | |
37 Underperform | $3.16B | ― | -17.61% | ― | ― | -2747.57% |
* Utilities Sector Average
Performance Comparison
TXNM
TXNM Energy
51.73
16.83
48.22%
IDA
IdaCorp
117.38
30.06
34.43%
POR
Portland GE
42.19
3.42
8.82%
ENIC
Enel Chile SA
3.09
0.35
12.77%
CEPU
Central Puerto SA
10.70
0.73
7.32%
OKLO
Oklo Inc
22.50
9.74
76.33%
TXNM Energy Earnings Call Summary
Earnings Call Date: Feb 21, 2025 | % Change Since: 0.58% | Next Earnings Date: May 9, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance and growth prospects, with significant investments and regulatory successes. However, increased expenses and potential legislative challenges in Texas were noted. The positive aspects of growth and investment opportunities outweigh the negatives.Highlights
Strong Financial Performance
Ongoing earnings for 2024 were $2.74 per share, at the high end of guidance. Guidance for 2025 was introduced at a range of $2.74 to $2.84 per share.
Increased Investment Opportunities
Five-year investment plan in Texas increased by over $1 billion, targeting earnings growth of 7% to 9% through 2029.
Regulatory Accomplishments
Unopposed settlement of rate request in New Mexico and unanimous settlement in TNMP's system resiliency plan.
Dividend Increase
Board increased the dividend by 5%, maintaining the targeted payout ratio of 50% to 60% for 2025.
Growth in Texas
TNMP set new system peak records with an 18% increase over the 2023 peak, and data center demand reached over 600 megawatts.
Lowlights
Increased Depreciation and Expenses
Higher depreciation, property tax, and interest expense associated with new investments year over year.
Dilution Impacts
Dilution impacts from shares issued in December 2023 lowered per-share earnings.
Regulatory and Legislative Challenges
Potential impacts of Texas house bill 2868 on capital structure and rates determination.
Company Guidance
During the TXNM Energy Q4 2024 conference call, the company provided a comprehensive update on its financial performance and future guidance. Ongoing earnings for 2024 were reported at $2.74 per share, aligning with the high end of their guidance, and the company introduced a 2025 guidance range of $2.74 to $2.84 per share. This reflects robust growth in Texas and includes the unopposed settlement of a rate request in New Mexico. The five-year investment plan in Texas saw an increase of over $1 billion, contributing to a targeted earnings growth of 7% to 9% through 2029. The board also approved a 5% dividend increase, maintaining the targeted payout ratio of 50% to 60% for 2025. TXNM Energy highlighted regulatory achievements, including an unopposed stipulation with the New Mexico Public Regulation Commission and a system resiliency plan in Texas with $566 million in capital investments. The company also reported setting new system peak records at TNMP, with data center demand totaling over 600 megawatts, and forecasted future growth expectations. Additionally, TXNM Energy outlined a capital plan of $7.8 billion through 2029, a $1.6 billion increase from prior estimates, and detailed financing strategies, including $1.3 billion in equity issuance to support this investment plan.TXNM Energy Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
TXNM Energy Approves 2025 Executive Incentive Plans
Neutral
Feb 27, 2025
On February 24, 2025, TXNM Energy’s Board of Directors approved new compensatory arrangements for its executive officers, including the 2025 Officer Annual Incentive Plan and the 2025 Long-Term Incentive Plan. The Annual Incentive Plan, covering the year 2025, offers cash bonuses based on achieving specific earnings per share and other goals, with payouts contingent on meeting a minimum earnings threshold. The Long-Term Incentive Plan spans three years and includes performance share awards and time-vested restricted stock rights, with awards contingent on meeting earnings growth, relative TSR, and FFO/Debt Ratio goals. Amendments to previous plans were also approved to exclude extraordinary events from performance calculations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.