D

Based on the provided analysis, here is a comprehensive assessment of whether Dominion Energy (D) is worth buying.

Technical Analysis D shows signs of short-term recovery but continues to underperform the broader market over the medium term. Trading near the upper end of its 52-week range, the stock is not in an extreme position, but its recent strength has yet to fully reclaim prior losses. The technical picture suggests a neutral stance with no clear overbought or oversold signals at the current level.

Fundamentals The company demonstrates solid profitability with improving revenue and expanding margins, indicating healthy operational control. However, this is counterbalanced by concerning liquidity metrics, including negative free cash flow and a low quick ratio, alongside operational inefficiency evidenced by a low return on equity and a lengthy cash conversion cycle. The fundamentals present a mixed picture of strong earnings power tempered by weak cash generation and asset utilization.

Valuation Valuation metrics send conflicting signals; the attractive PEG and forward P/E ratios suggest the stock is undervalued based on its growth prospects. Conversely, the very high EV/EBITDA ratio indicates it is expensive relative to its cash flow, creating a valuation paradox. Without specific peer data, it's challenging to gauge its relative appeal, but the elevated EV/EBITDA is a notable headwind.

Risk The stock presents a lower volatility profile than the market, which is appealing for risk-averse investors. The low beta and manageable maximum drawdown point to relative stability. However, the fundamental analysis highlights company-specific risks, particularly regarding liquidity and operational efficiency, which investors should monitor closely.

Buy Recommendation

Based on the analysis, a cautious approach is recommended at this time. While the profitability trends and low PEG ratio are positive indicators, they are significantly offset by weak cash flow, liquidity concerns, and an expensive valuation on a cash flow basis. The stock may be suitable for income-focused investors who prioritize its lower volatility, but growth-oriented investors might find better opportunities with stronger fundamental health. Further improvement in its cash conversion cycle and free cash flow would be needed to support a more bullish outlook.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the analysis provided, here is a 12-month outlook for Dominion Energy (D):

Catalysts: The primary positive catalyst for D is its improving profitability, characterized by expanding margins and an attractive forward P/E and PEG ratio, which could attract investors seeking value. Its low beta also positions it as a potential defensive holding if market volatility increases.

Risks: Significant risks are centered on weak cash flow generation (negative free cash flow) and operational inefficiency (low ROE, long cash conversion cycle). These factors could limit financial flexibility and hinder the company's ability to fund investments or maintain its dividend comfortably. The high EV/EBITDA ratio is a persistent valuation headwind that may cap multiple expansion.

Outlook & Target: The outlook for the next 12 months is neutral to cautiously optimistic. The stock is likely to remain range-bound, with progress contingent on demonstrating tangible improvement in its cash flow metrics. While no analyst target is cited, a realistic price range would likely be closely tied to the current price, reflecting the balanced but muted risk/reward profile.

*Note: This is not investment advice, for reference only.*

Wall Street Consensus

Most Wall Street analysts are optimistic about D's 12-month outlook, with consensus target around $60.25, indicating expected upside potential.

Overall, D has investment potential but also faces challenges. Here are key factors to weigh before investing.

D exhibits modest recent performance with modest near-term gains partially offsetting slight medium-term declines.

While the stock is up 1.46% over the past month, it remains down 2.06% over three months and has significantly underperformed the market by 5.43% during this period, indicating relative weakness despite its low beta of 0.699. The short-term recovery remains insufficient to reclaim recent losses.

Trading at $59.02, D currently sits near the upper end of its 52-week range ($48.07-$62.87), approximately 83% above its low point. Given its position near yearly highs and the 13.53% maximum drawdown experienced over the past year, the stock appears neither severely overbought nor oversold at current levels.

Revenue & Profitability Revenue showed sequential growth from $3.81B to $4.53B quarter-over-quarter, while net profit margin expanded from 19.9% to 22.2%. Operating income ratio improved to 29.6%, supported by a solid gross margin of 55.5%, indicating strong pricing power and cost control.

Financial Health The company maintains a debt-to-equity ratio of 1.75 and interest coverage of 2.54, suggesting manageable but somewhat elevated leverage. However, the quick ratio of 0.65 and negative free cash flow per share (-1.27) indicate potential liquidity constraints and weak cash generation relative to operational needs.

Operational Efficiency Return on equity stands at 3.6% while asset turnover remains low at 0.041, reflecting inefficient utilization of the asset base. The extended cash conversion cycle of 90 days, driven by high inventory days outstanding (85), points to working capital management challenges affecting overall operational effectiveness.

Valuation Level

D's current PE ratio of 18.99 is reasonable, and the forward PE of 12.95 suggests expected earnings growth, signaling potential undervaluation. The PEG ratio of 0.38, well below 1, strongly indicates the stock is undervalued relative to its growth prospects. However, the high EV/EBITDA of 41.85 is a significant concern, pointing to expensive valuation on a cash flow basis, which contrasts with the positive signals from the PE-based metrics.

Peer Comparison

Without specific industry average data, a precise peer comparison cannot be conducted. Generally, a PEG ratio below 1 is considered attractive, and D's low PEG is a positive differentiator. The elevated EV/EBITDA ratio, however, would likely be high relative to many industry peers, suggesting its valuation may be less compelling on a cash flow basis compared to the broader market.

Volatility Risk: With a beta of 0.699, the stock exhibits lower volatility than the broader market, suggesting it is less susceptible to sharp market swings. A 1-year maximum drawdown of -13.53% further indicates a relatively moderate level of loss during recent downturns, pointing to a stable risk profile for volatility-sensitive investors.

Other Risks: The absence of measurable short interest implies that speculative pressure against the stock is currently low. However, other potential risks, such as liquidity concerns or company-specific operational challenges, are not detailed here and warrant independent investigation for a comprehensive assessment.