D
D
Hold 2026-03-12
Model
DDM
Price at Report
$63.58
Base IV
$62.21
Bear IV
$52.48
Bull IV
$74.72
Entry Zone: 48-57 · Sell Above: 72
Bore Family Office
Valuation Report — Dominion Energy (D) • March 12, 2026
3-Stage DDM (Ke) • Discount Rate: 7.10% • Current Price: $63.58
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Dominion Energy is one of the largest regulated electric utilities in the United States, serving approximately 3.6 million customers across Virginia, North Carolina, and South Carolina. Founded in 1909 as Virginia Railway and Power, Dominion has evolved into a pure-play regulated utility after selling its gas transmission and storage assets (Questar Pipeline, Cove Point LNG) to Berkshire Hathaway in 2020 for ~$9.7 billion — a transaction that triggered a 33% dividend cut from $3.76 to $2.54 as the company reset its payout to match the smaller, more focused earnings base.
Today, Dominion is at the center of the electrification megatrend. Virginia has become a top destination for hyperscaler data centers (AWS, Microsoft, Google, Meta), and Dominion Energy Virginia serves the largest data center market in the world (Data Center Alley in Northern Virginia). The company raised its 5-year capital spending plan by ~30% to approximately $58 billion through 2029, driven by grid modernization, the Coastal Virginia Offshore Wind (CVOW) project (the largest offshore wind project in the US at 2.6 GW), and capacity additions to meet surging data center demand. Court approval was recently secured to resume CVOW construction. Despite negative free cash flow from this elevated capex, dividends are comfortably covered by operating cash flow (OCF payout ~42%).
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Dominion Energy Virginia (VEPCO) | $11,500M | 70% | +16.0% | 28.0% | Largest segment — serves VA/NC including Data Center Alley; offshore wind |
| Dominion Energy South Carolina (DESC) | $3,500M | 21% | +8.0% | 25.0% | Electric and gas utility in SC; steady regulated growth |
| Contracted Energy | $1,500M | 9% | +12.0% | 20.0% | Solar and other contracted renewable generation |
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $11,419 | $13,938 | $14,393 | $14,459 | $16,506 |
| EBITDA ($M) | $4,777 | $4,560 | $6,542 | $5,886 | $7,098 |
| Operating Income ($M) | $1,996 | $1,447 | $3,414 | $3,247 | $4,414 |
| Net Income ($M) | $6,818 | $2,382 | $1,837 | $2,231 | $2,984 |
| EPS (diluted) | $4.12 | $1.33 | $2.25 | $2.33 | $3.45 |
| Free Cash Flow ($M) | $-1,923 | $-3,891 | $-3,639 | $-7,180 | $-7,280 |
| Annual DPS | $2.520 | $2.670 | $2.670 | $2.670 | $2.670 |
| Total Debt ($M) | $40,581 | $41,344 | $44,243 | $41,750 | $48,941 |
| Rev YoY Growth | — | +22.1% | +3.3% | +0.5% | +14.2% |
| EBITDA Margin | 41.8% | 32.7% | 45.5% | 40.7% | 43.0% |
| Operating Margin | 17.5% | 10.4% | 23.7% | 22.5% | 26.7% |
| Net Margin | 59.7% | 17.1% | 12.8% | 15.4% | 18.1% |
⚙️ Ke (DDM)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.35% | 10-yr US Treasury yield |
| Beta (β) | 0.500 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 7.10% | Ke = Rf + β × ERP |
📈 DDM Scenarios
$52
🔴 Bear
$62
📊 Base
$75
🚀 Bull
$63.58
Current Price
$65
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 1.5% | 2.0% | 7.10% | $52 | ▼17.5% |
| 📊 Base | 3.5% | 2.5% | 2.5% | 7.10% | $62 | ▼2.2% |
| 🚀 Bull | 5.0% | 3.5% | 3.0% | 7.10% | $75 | ▲17.5% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 1.5% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $2.723 | $2.543 | $2.54 |
| Year 2 | Stage 1 | $2.778 | $2.422 | $4.96 |
| Year 3 | Stage 1 | $2.833 | $2.306 | $7.27 |
| Year 4 | Stage 1 | $2.890 | $2.197 | $9.47 |
| Year 5 | Stage 1 | $2.948 | $2.092 | $11.56 |
| Year 6 | Stage 2 | $2.992 | $1.983 | $13.54 |
| Year 7 | Stage 2 | $3.037 | $1.879 | $15.42 |
| Year 8 | Stage 2 | $3.083 | $1.781 | $17.20 |
| Year 9 | Stage 2 | $3.129 | $1.688 | $18.89 |
| Year 10 | Stage 2 | $3.176 | $1.599 | $20.49 |
| Terminal | — | TV=$63.51 | PV(TV)=$31.99 (61% of IV) |
Base Scenario
Stage 1: 3.5% | Stage 2: 2.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $2.763 | $2.580 | $2.58 |
| Year 2 | Stage 1 | $2.860 | $2.494 | $5.07 |
| Year 3 | Stage 1 | $2.960 | $2.410 | $7.48 |
| Year 4 | Stage 1 | $3.064 | $2.329 | $9.81 |
| Year 5 | Stage 1 | $3.171 | $2.250 | $12.06 |
| Year 6 | Stage 2 | $3.250 | $2.154 | $14.22 |
| Year 7 | Stage 2 | $3.332 | $2.061 | $16.28 |
| Year 8 | Stage 2 | $3.415 | $1.973 | $18.25 |
| Year 9 | Stage 2 | $3.500 | $1.888 | $20.14 |
| Year 10 | Stage 2 | $3.588 | $1.807 | $21.95 |
| Terminal | — | TV=$79.95 | PV(TV)=$40.26 (65% of IV) |
Bull Scenario
Stage 1: 5.0% | Stage 2: 3.5% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $2.804 | $2.618 | $2.62 |
| Year 2 | Stage 1 | $2.944 | $2.566 | $5.18 |
| Year 3 | Stage 1 | $3.091 | $2.516 | $7.70 |
| Year 4 | Stage 1 | $3.245 | $2.467 | $10.17 |
| Year 5 | Stage 1 | $3.408 | $2.418 | $12.58 |
| Year 6 | Stage 2 | $3.527 | $2.337 | $14.92 |
| Year 7 | Stage 2 | $3.650 | $2.258 | $17.18 |
| Year 8 | Stage 2 | $3.778 | $2.183 | $19.36 |
| Year 9 | Stage 2 | $3.910 | $2.109 | $21.47 |
| Year 10 | Stage 2 | $4.047 | $2.038 | $23.51 |
| Terminal | — | TV=$101.67 | PV(TV)=$51.21 (69% of IV) |
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.1% | $86 | $96 | $110 | $131 | $165 |
| 5.6% | $75 | $83 | $92 | $106 | $126 |
| 6.1% | $67 | $72 | $80 | $89 | $102 |
| 6.6% | $60 | $64 | $70 | $77 | $86 |
| 7.1% | $55 | $58 | $62 | $67 | $74 |
| 7.6% | $50 | $53 | $56 | $60 | $65 |
| 8.1% | $46 | $48 | $51 | $54 | $58 |
| 8.6% | $43 | $45 | $47 | $49 | $52 |
| 9.1% | $40 | $42 | $43 | $45 | $48 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E | Fwd P/E | EV/EBITDA | Yield | Payout | Beta | Verdict |
|---|---|---|---|---|---|---|---|---|
| Dominion Energy | D | 18.4x | 17.7x | 14.2x | 4.20% | 77% | 0.50 | Subject |
| NextEra Energy | NEE | 32.0x | 28.5x | 18.5x | 2.50% | 60% | 0.55 | Premium — clean energy leader |
| Southern Company | SO | 21.5x | 19.8x | 12.8x | 3.30% | 62% | 0.45 | Well-run, premium utility |
| Duke Energy | DUK | 20.3x | 18.5x | 13.5x | 3.50% | 65% | 0.42 | Closest peer — similar capex cycle |
| AEP (American Elec) | AEP | 19.1x | 17.8x | 13.0x | 3.40% | 62% | 0.48 | Midwest/South utility — benchmark |
| Eversource Energy | ES | 17.8x | 16.5x | 12.0x | 4.50% | 72% | 0.55 | Offshore wind exit — cautionary tale |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $2.670 |
| Current Yield | 4.20% |
| Consecutive Growth Years | 0 |
| 1-yr DPS CAGR | +0.0% |
| 3-yr DPS CAGR | +0.0% |
| 5-yr DPS CAGR | +1.2% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 77.4% ⚠️ |
| FCF Payout Ratio | -37.0% |
| Sustainability Verdict | Safe — Watch CapEx |
Safe — Dividends are well-covered by operating cash flow (OCF payout ~42%). The negative FCF is entirely driven by the elevated $12.6B/yr capital program (offshore wind, grid modernization, data center capacity), not operating weakness. Operating cash flow of $5.4B comfortably covers $2.3B in annual dividends with 2.3× coverage. The dividend was deliberately reset in 2020 when Dominion sold its gas transmission assets — this was a strategic portfolio simplification, not financial distress. DPS has been held flat at $2.67 since 2022 to preserve capital for the massive capex program. Expect dividend growth to resume (3-5%/yr) as CVOW and other projects enter rate base and earnings growth materializes from the $58B 5-year capex plan. Key risk: CVOW cost overruns or regulatory disallowance could pressure the payout ratio.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $4.12 | — | — | — | Actual |
| 2022 | $1.33 | — | — | — | Actual |
| 2023 | $2.25 | — | — | — | Actual |
| 2024 | $2.33 | — | — | — | Actual |
| 2025 | $3.45 | — | — | — | Actual |
| 2026 | $3.44 | $3.67 | $3.84 | 23 | Estimate |
| 2027 | $3.68 | $3.91 | $4.11 | 21 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $11.4B | — | — | — | Actual |
| 2022 | $13.9B | — | — | — | Actual |
| 2023 | $14.4B | — | — | — | Actual |
| 2024 | $14.5B | — | — | — | Actual |
| 2025 | $16.5B | — | — | — | Actual |
| 2026 | $16.1B | $17.4B | $18.9B | 20 | Estimate |
| 2027 | $16.9B | $18.5B | $20.6B | 18 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $64.73 | Range $59–$70
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| — | Scotiabank | Hold | $67 | +5.4% |
| — | Mizuho | Hold | $66 | +3.8% |
| — | TD Cowen | Hold | $65 | +2.2% |
| — | Morgan Stanley | Hold | $65 | +2.2% |
| — | Wells Fargo | Buy | $64 | +0.7% |
| — | BMO Capital | Hold | $64 | +0.7% |
| — | KeyBanc | Hold | $64 | +0.7% |
| — | Barclays | Buy | $63 | -0.9% |
| — | RBC Capital | Hold | $63 | -0.9% |
| — | Guggenheim | Hold | $62 | -2.5% |
| — | UBS | Sell | $59 | -7.2% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q4 2025 | $0.64 vs $0.60 | +$0.04 ✅ | $4.1B vs $3.9B | +$0.2B ✅ | Raised 5yr capex +30% |
| Q3 2025 | $1.16 vs $1.12 | +$0.04 ✅ | $4.5B vs $4.4B | +$0.1B ✅ | Maintained |
| Q2 2025 | $0.88 vs $0.85 | +$0.03 ✅ | $3.8B vs $3.8B | +$0.1B ✅ | Maintained |
| Q1 2025 | $0.77 vs $0.73 | +$0.04 ✅ | $4.1B vs $4.0B | +$0.1B ✅ | Maintained |
(e) Confidence Band Commentary
The analyst range is relatively tight (PT $59–$70, ~19% spread), consistent with a regulated utility where earnings are largely predictable. The consensus is heavily skewed Hold (8 of 11 analysts), reflecting fair valuation at current prices. Dominion has beaten EPS estimates in all 4 recent quarters by modest amounts ($0.03–$0.05), a typical pattern for well-managed utilities that guide conservatively. The EPS estimate spread for 2026 ($3.44–$3.84) is only 12%, indicating high confidence in near-term earnings. Revenue estimates have wider dispersion ($16.1B–$18.9B) reflecting uncertainty around data center load growth timing. Key swing factor: whether CVOW costs stay within the approved recovery framework — this is the primary source of upside/downside variance vs consensus.
💡 Investment Thesis
- Data center electrification tailwind: Dominion Energy Virginia serves "Data Center Alley" in Northern Virginia — the largest data center market globally. Hyperscaler demand is driving unprecedented load growth for a utility, supporting rate base expansion and long-term earnings growth well above typical utility rates. This is a structural, multi-decade demand driver that sets Dominion apart from other regulated utilities.
- Massive capex program = future earnings growth: The ~$58B 5-year capital plan (raised 30% in Q4 2025) includes offshore wind (CVOW, 2.6 GW), grid modernization, and new generation capacity. As these projects enter rate base, they should drive 5-9% EPS growth and enable dividend growth resumption after 4 years of flat payouts.
- Dividend reset was strategic, not distressed: The 2020 dividend cut was a deliberate decision tied to the Questar/Cove Point asset sale — not a sign of financial distress. Since the reset, payout ratio has normalized to ~77% of EPS and ~42% of operating cash flow. When capex intensity moderates, DPS growth should resume at 3-5% annually.
- Bear case — execution risk: CVOW is a $12B+ project with construction risk, potential cost overruns, and regulatory recovery uncertainty. Total debt of $49B (1.5× equity) means interest rate sensitivity is elevated. If data center demand disappoints or regulatory outcomes are unfavorable, the premium capex plan becomes a burden rather than a catalyst.
- Bear case — balance sheet leverage: Debt/equity ~1.5x with $49B total debt. Rising rates increase refinancing costs. Negative FCF means external financing (debt/equity issuance) is required to fund capex, creating dilution risk.
⚖️ DDM Verdict: Hold — Dominion Energy (D)
Current price: $63.58 | Analyst Avg PT: $64.73
$52
🔴 Bear
$62
📊 Base
$75
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$57 | Begin position |
| Tier 2 — Add | ≤$53 | Add on weakness |
| Tier 3 — Full | ≤$48 | Full allocation |
| Sell Alert | ≥$72 | Above fair value — consider trimming |
Dominion Energy is fairly valued at $63.58, trading in line with the analyst consensus PT of $64.73 and our DDM Base case. The 4.2% yield is attractive for income investors, and the data center demand tailwind provides above-average growth visibility for a utility. However, execution risk on the massive capex program (particularly CVOW offshore wind) and elevated leverage warrant caution at current prices. Hold for existing positions; Accumulate below $57. The stock becomes compelling at Tier 2 ($53) where the yield exceeds 5% and provides a margin of safety against capex execution risk. Sell discipline above $72 where the stock prices in full Bull case assumptions.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Choice | DDM with Ke — Dominion is a regulated utility with explicit, stable dividend policy. FCF is deeply negative due to elevated capex ($12.6B/yr) but operating cash flow ($5.4B) comfortably covers dividends ($2.3B). DDM is the standard model for regulated utilities. |
| Beta Selection | Used β=0.50 (sector-appropriate for regulated utility) vs StockAnalysis reported 0.67. The higher reported beta likely reflects CVOW offshore wind construction risk and the 2020 restructuring volatility. Peer average beta: Duke 0.42, SO 0.45, AEP 0.48, NEE 0.55. |
| DPS Base | $2.67/share annual (current quarterly $0.6675 × 4). Dividend has been flat since March 2022. We model DPS growth resuming as capex projects enter rate base. Note: 2020 dividend cut from $3.76 to $2.54 was a deliberate strategic reset when Dominion sold gas transmission assets to Berkshire Hathaway, not financial distress. |
| Growth Rates | Bear 2.0%/1.5%/2.0% — flat dividend, regulatory headwinds, CVOW cost overruns. Base 3.5%/2.5%/2.5% — gradual DPS growth resumes as capex projects enter rate base. Bull 5.0%/3.5%/3.0% — accelerated data center demand, clean execution on CVOW, re-rating toward premium utility multiples. Analyst consensus EPS growth ~6.5% supports base-case DPS growth of 3.5% with payout ratio modestly declining from 77% to 73%. |
| Sanity Check | Analyst consensus PT $64.73. DDM Base IV should be within ±20% of this. Eversource (ES) provides a cautionary comparable — its offshore wind exposure caused significant write-downs and multiple compression. Dominion's CVOW is further along but execution risk remains the key differentiator vs simpler utility stories. |
| Negative FCF | Dominion's negative FCF (-$7.3B in FY2025) is not a going-concern risk. It reflects the massive $58B 5-year capex plan funded by operating cash flow + external financing. OCF covers dividends 2.3× ($5.4B OCF / $2.3B dividends). This is normal for a utility in a heavy build cycle. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.