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Introduction & Market Context
Xcel Energy Inc (NASDAQ:XEL) reported first quarter 2025 earnings on April 24, showing a slight year-over-year decline in earnings per share while maintaining its full-year guidance. The utility company continues to advance its clean energy transition with significant infrastructure investments and regulatory approvals across its service territories.
Xcel Energy’s stock closed at $71.55 on April 23, 2025, representing a 0.22% increase on the day. The company’s shares have traded between $51.97 and $73.38 over the past 52 weeks, showing relative stability despite broader market fluctuations.
Quarterly Performance Highlights
Xcel Energy reported first quarter 2025 earnings per share of $0.84, compared to $0.88 in the same period last year, representing a 4.5% decrease. Despite this slight decline, the company reaffirmed its 2025 EPS guidance range of $3.75 to $3.85.
As shown in the following breakdown of EPS results by operating company, performance varied across Xcel’s subsidiaries:
The earnings decline was primarily driven by higher operating and maintenance expenses, increased depreciation and amortization, higher interest charges, and elevated fuel costs. These negative factors were partially offset by increased electric and natural gas revenues from rate cases and fuel cost recovery.
The following waterfall chart illustrates the key factors impacting the year-over-year EPS change:
Weather-adjusted retail electric sales grew by 1.9% in Q1 2025 compared to the same period last year, with SPS territory showing the strongest growth at 4.8%. Customer growth remained solid with a 1.1% increase in electric customers and 0.9% growth in natural gas customers across Xcel’s service territories.
Strategic Initiatives
During the first quarter, Xcel Energy invested $2.3 billion in resilient and reliable energy infrastructure, continuing its ambitious capital deployment strategy. The company highlighted significant progress in its regulatory agenda, including Minnesota commission approval of approximately 5,000 MW of generation, which includes 720 MW of company-owned generation and about 2,800 MW of wind that will use the Minnesota Energy Connection transmission line.
Xcel Energy also reached constructive settlements for its Colorado Wildfire Mitigation and Texas System Resiliency plans, which are expected to receive commission decisions by the third quarter of 2025. These settlements approve approximately $1.9 billion of investments for Colorado wildfire mitigation and $490 million for Texas system resiliency.
The company’s additional investment pipeline exceeds $10 billion, focused on generation, transmission, and data center growth opportunities:
Data center growth represents a significant opportunity for Xcel Energy, with total customer requests of approximately 8,900 MW. The company notes that a 1 GW data center is equivalent to about 1 million residential customers in terms of electricity demand and requires approximately 3 GW of renewable and firm dispatchable generation to support it.
Forward-Looking Statements
Xcel Energy reaffirmed its 2025 ongoing EPS guidance of $3.75 to $3.85, based on several key assumptions including normal weather patterns, a 3% increase in weather-adjusted retail electric sales, and a 1% increase in weather-adjusted retail firm natural gas sales.
The company’s 2025 guidance incorporates the following financial expectations:
Looking beyond 2025, Xcel Energy maintains its long-term financial objectives of 6-8% EPS growth and a dividend growth rate of 4-6% CAGR, targeting a payout ratio of 50-60%. Combined with the dividend yield of 3-4%, the company aims to deliver a total shareholder return of 9-11%.
The company’s balanced investment thesis is built on three key pillars: consistent delivery as a regulated utility, providing resilient and affordable energy services, and maintaining a transparent long-term growth plan.
Financial Position
Xcel Energy continues to maintain a strong balance sheet with projected FFO/Debt of approximately 17% through its planning period of 2025-2029. The company’s debt-to-EBITDA ratio is expected to improve from 5.6x in 2025 to 5.0x by 2029, while maintaining an equity ratio of 41%.
The company raised its dividend by 4.1% in 2025, marking the 22nd consecutive annual increase. This consistent dividend growth underscores Xcel Energy’s commitment to returning value to shareholders while investing in its infrastructure.
For 2025, Xcel Energy has already completed $2.1 billion in debt financing, with an additional $2.8 billion planned for the remainder of the year. The company’s financing plan for 2025-2029 includes $25.32 billion from cash flow from operations, $15.18 billion from incremental debt, and $4.5 billion from equity (including $500 million from dividend reinvestment programs).
Xcel Energy’s customer bills remain competitive, with residential electric bills 28% below the national average and natural gas bills 12% below the national average. The company has maintained a compound annual growth rate of approximately 1.7% for residential electric bills from 2014 to 2024, while natural gas bills have actually decreased by about 0.6% annually during the same period.
In conclusion, despite the slight decline in first quarter earnings, Xcel Energy continues to execute on its long-term strategy of infrastructure investment, clean energy transition, and balanced shareholder returns. The company’s reaffirmed guidance and progress on regulatory approvals suggest confidence in achieving its financial and operational objectives for 2025.
Full presentation:
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