Duke Energy

Methodology

Duke Energy's regulated electric utility operations across six southeastern states generate highly predictable earnings from allowed returns on investments. The vertically-integrated utility model provides stable cash flows with minimal competitive or commodity risk. Fair value calculations work reliably when accounting for low-single-digit earnings growth from rate base expansion and infrastructure spending.

Methodology

Duke typically trades at PEG ratios between 1.5-2.5x, reflecting standard utility valuations that emphasize earnings stability over growth potential. The company's coal-to-gas conversion and grid modernization investments support modest but dependable growth. PEG works reasonably well though utilities primarily trade on dividend yields rather than growth metrics.

Methodology

Duke pays a substantial dividend yielding 4-5% that represents the primary investment appeal for this defensive utility, making PEGY far more relevant than PEG. The regulated model ensures long-term dividend sustainability and inflation-linked growth. Total return for large utilities centers on yield generation, with PEGY capturing the income-oriented value proposition better than growth-based metrics.