Long-established in the Utilities - Regulated industry, Dominion Energy Inc (D, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 1.71%, juxtaposed with a three-month change of 4.08%. 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 Dominion Energy Inc.
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: 4/10
- GF Value rank: 4/10
- Momentum rank: 4/10
Based on the above method, GuruFocus assigned Dominion Energy Inc the GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding Dominion Energy Inc's Business
Dominion Energy Inc, with a market cap of $39.36 billion and sales of $16.39 billion, is a powerhouse in the energy sector. Operating with a 24.63% margin, this Richmond, Virginia-based company boasts over 30 gigawatts of electric generation capacity and more than 90,000 miles of electric transmission and distribution lines. It is also at the forefront of renewable energy development, constructing a rate-regulated 5.2 GW wind farm off the Virginia Beach coast, marking a significant step towards sustainable energy solutions.
Financial Strength Breakdown
The financial strength of Dominion Energy Inc is a cause for concern. With an interest coverage ratio of 2.22, it falls short of the industry standard, indicating potential difficulties in managing interest expenses. The Altman Z-Score, at a precarious 0.75, signals a risk of financial distress, while a cash-to-debt ratio of 0 reveals challenges in debt management. Furthermore, a debt-to-Ebitda ratio of 5.55 exceeds the cautionary threshold set by investment guru Joel Tillinghast, suggesting that the company's debt levels may be unsustainable without adequate tangible asset coverage.
Growth Prospects
Growth is another area where Dominion Energy Inc appears to struggle. The company's low growth rank and a predictability rank of just one star out of five contribute to investor uncertainty. These metrics reflect a lack of consistent revenue and earnings growth, which are crucial for long-term investment success.
Next Steps
Considering Dominion Energy Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors seeking more robust investment opportunities can explore companies with strong GF Scores using the GF Score Screen available to GuruFocus Premium members. As the energy industry evolves, it will be crucial to monitor how Dominion Energy Inc adapts to these financial and growth challenges.
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.
