Did you notice that Duke Energy (NYSE:DUK) jumped more than 10% in the last 5 trading days, with Sep 30 accounting for the bulk of the increase? It appears that the trigger was news of Duke rebuffing a takeover bid from NextEra. But what does this trigger mean for investors over the next month or a year? Will the momentum continue, or will Duke’s stock stabilize? Turns out, the chances of Duke Energy’s stock moving up by 10% over the next 1 month are nearly 3x the chances of it moving down by same magnitude. Why do we say so? Because that’s how the stock has typically behaved in the past.
Our AI engine analyzes past patterns in stock movements to predict near term behavior for a given level of movement in the recent period, and suggests nearly a 23% probability of Duke Energy moving up 10% over the next 21 trading days. In comparison, the chances of moving down -10% during the same time period are just 8%. Over the next 3 months, the chances of a 10% rebound are higher at 31%. Our detailed dashboard highlights the chances of Duke Energy’ stock falling or rising and should help you understand near-term return probabilities for different levels of movements.
But what do the underlying fundamentals suggest? They very much agree with our AI engine and suggest that Duke could be a good investment from a long-term perspective, too. Our dashboard Big Movers: Duke Energy Moved 10.5% – What Next? lays this out.
Duke Energy’s stock price decreased -6.1% this year, from $88.27 to $82.87, before moving 10.5% last week, and ending at $91.58. At the beginning of this year, Duke Energy’s trailing 12 month P/S ratio was 2.57. This figure decreased -2.7% to 2.5, before ending at 2.76. This indicates that Duke Energy is a more expensive stock now. But the conclusion is incomplete without peer comparison. Compared to Duke Energy’s P/S multiple of 2.76, the figure for its peers NEE, SO, and AEP stands at 7.25, 3.46, and 2.79 respectively. Thus, even though slightly more expensive, the stock is still cheaper than some of the peers suggesting room for further increase. Do the underlying financials support this? Let’s check.
Duke Energy’s revenue increased 6.4% from $23,565 Mil in 2017 to $25,079 Mil in 2019. For the last 12 months, this figure stood at $24,413 Mil, implying only a minor decrease of -2.7% over 2019 numbers. If we look at at net margin, the figure increased 9.5% from 13% in 2017 to 14.2% in 2019, before falling to 7.9% in the last 12 months. No wonder the market has rewarded Duke Energy’s stock price, which has increased 23% between 2017 and now. Excluding the impact of the pandemic, the company posted slow but steady growth while improving margins. Interestingly, the pandemic had only a limited impact on Duke. The company maintained positive margin while the revenue saw only a minor decline. This reinforces our assessment that Duke’s stock has room for growth.
Taking the above perspectives together, it makes sense to invest in Duke Energy. But what if you are looking for a more balanced and high performing portfolio? Here’s a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.