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On Tuesday, Mizuho (NYSE:MFG) Securities expressed a positive outlook on TXNM Energy (NYSE: TXNM), elevating the stock’s rating from Neutral to Outperform while maintaining a price target of $53.00. Currently trading at $47.87 with a P/E ratio of 17.9x, the stock appears fairly valued according to InvestingPro Fair Value metrics. The upgrade reflects the firm’s confidence in TXNM’s projected growth in its rate base and earnings per share (EPS), which are anticipated to increase at some of the highest compound annual growth rates (CAGR) in the electric utilities sector, particularly among small-cap companies.
Analysts at Mizuho highlighted several factors contributing to the bullish stance on TXNM Energy. The company is expected to achieve an annual rate base growth of approximately 12% and an EPS growth of 7% to 9%. This growth trajectory is one of the fastest in the sector, surpassed only by Portland General Electric (NYSE:POR) which has seen a 6% growth compared to TXNM’s 5% in the period from 2019 to 2024. Notably, TXNM has maintained dividend payments for 30 consecutive years and has raised its dividend for 13 straight years, with a current yield of 3.41%.
The positive regulatory environments in New Mexico and Texas were also cited as reasons for the upgrade. Furthermore, TXNM Energy is anticipated to benefit from potential increases in capital expenditures for transmission and generation projects in both states. These factors combined suggest a promising future for the company’s financial performance. InvestingPro analysis reveals 10+ additional investment insights about TXNM, including detailed financial health scores and comprehensive valuation metrics available in the Pro Research Report.
Mizuho also pointed out upcoming events that could serve as significant catalysts for TXNM Energy this year. One is the final decision on the Electric Reliability Council of Texas’s (ERCOT) Permian Basin Reliability import path, due in May 2025, which could result in a capital expenditure upside of approximately $900 million for TNMP, depending on the project voltage. Another is a rate case filing by TNMP expected later in 2025.
Currently, TXNM Energy’s shares are trading at roughly a 10% discount compared to its peers. With analyst price targets ranging from $53 to $58 and a consensus recommendation of 1.78 (Buy), market experts maintain an optimistic outlook. Mizuho analysts believe that the stock could re-rate to the group-average, indicating a potential uplift in the company’s market valuation. This reassessment of TXNM Energy’s stock underscores Mizuho’s belief in the company’s robust growth prospects and favorable position within the industry, despite InvestingPro data showing some concerns regarding the company’s cash flow and debt levels.
In other recent news, TXNM Energy has declared a regular quarterly dividend of $0.4075 per share on its common stock, set for distribution on May 16, 2025, to shareholders recorded by April 25, 2025. The company also announced a dividend of $1.145 per share on its cumulative preferred stock, payable on April 15, 2025, to those recorded by March 31, 2025. These announcements reflect TXNM Energy’s ongoing practice of returning value to shareholders through consistent dividends. In addition, Mizuho Securities has raised its price target for TXNM Energy from $50 to $53, maintaining a Neutral rating, following the company’s recent expansion of its five-year capital expenditure plan and an increased earnings per share growth estimate.
Evercore ISI has also updated its outlook, increasing the price target to $57 from $54, while maintaining an Outperform rating, citing anticipated earnings growth and strong regulatory execution. The firm applied a 16.5 times multiple to the 2027 EPS estimate, indicating confidence in TXNM’s future performance. Furthermore, TXNM Energy has approved new executive compensation plans, including a 2025 Officer Annual Incentive Plan and a Long-Term Incentive Plan, aligning executive rewards with company performance goals. These recent developments highlight TXNM Energy’s strategic focus on growth and shareholder value.
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