Download PDF

1. Company Snapshot

1.a. Company Description

PNM Resources, Inc., through its subsidiaries, provides electricity and electric services in the United States.It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments.The PNM segment engages in the generation, transmission, and distribution of electricity.


The segment generates electricity using coal, natural gas and oil, nuclear fuel, solar, wind, and geothermal energy sources.As of December 31, 2021, this segment had owned or leased facilities with a total net generation capacity of 2,168 megawatts; and owned 3,426 miles of electric transmission lines, 5,751 miles of distribution overhead lines, 5,765 miles of underground distribution lines, and 250 substations.The segment also owns and leases communication, office and other equipment, office space, vehicles, and real estate.


The TNMP segment provides regulated transmission and distribution services.As of December 31, 2021, the segment owned 983 miles of overhead electric transmission lines, 7,297 miles of overhead distribution lines, 1,408 miles of underground distribution lines, and 113 substations.The segment also owns and leases vehicles, service facilities, and office locations throughout its service territory.


The company serves approximately 806,000 residential, commercial, and industrial customers and end-users of electricity in New Mexico and Texas.PNM Resources, Inc.was incorporated in 1882 and is headquartered in Albuquerque, New Mexico.

Show Full description

1.b. Last Insights on PNM

Recent negative drivers behind PNM Resources, Inc.'s stock performance include the company's high debt levels and increasing costs associated with its grid modernization efforts. The New Mexico Public Regulation Commission's approval of PNM's Grid Modernization Plan, while a positive step towards a more resilient and efficient electric system, may also lead to increased capital expenditures and debt. Additionally, the company's recent focus on decarbonization efforts may require significant investments in new technologies, potentially weighing on its short-term profitability.

1.c. Company Highlights

2. TXNM Energy Delivers Steady Q1 Earnings with Strong Growth Outlook

TXNM Energy reported Q1 2025 earnings per share (EPS) of $0.19, aligning with analyst expectations of $0.55. This performance keeps the company on track to meet its annual EPS guidance of $2.74 to $2.84, with a long-term growth target of 7% to 9%. The company highlighted strong system peak growth, driven by commercial businesses and data centers, with a 22% year-over-year increase in system peak demand. Data center load growth was particularly robust, rising by 70 megawatts, with an additional 150 megawatts expected by year-end. TNMP’s rate base growth is supported by timely recovery of investments, and the company’s $546 million system resiliency plan was approved, enhancing its ability to protect its system during extreme weather.

Publication Date: May -10

📋 Highlights
  • Q1 2025 Earnings Per Share (EPS):: Reported $0.19 per share, aligning with annual guidance of $2.74 to $2.84 per share.
  • System Resiliency Plan:: Approved $546 million investment to enhance grid protection during extreme weather events.
  • Load Growth:: 70 megawatts increase in data center load, with an additional 150 megawatts expected by year-end.
  • Capital Plan Update:: $750 million in capital expenditures approved through 2030, part of a broader $4 billion transmission investment opportunity.
  • Legislative Support:: New Mexico legislature passed bills supporting infrastructure development and wildfire prevention, aiding business attraction and community protection.

Operational Highlights and Capital Investments

TNMP set a new system peak in Q1, driven by growth in North and West Texas, particularly from commercial businesses and data centers. The company’s system resiliency plan includes $540 million in capital investments through 2027, with $83 million in transmission rate base investments already filed and $176 million in distribution investments awaiting approval. The ERCOT Permian Basin Reliability Study approved $750 million in investments by 2030, which have been incorporated into the capital plan. TNMP’s five-year capital plan remains unchanged, with investments growing from $600 million this year to over $1 billion starting in 2028. In New Mexico, the hearing examiner recommended approving the unopposed stipulation in the rate review, and the company filed an unopposed stipulation for 450 megawatts of new resources, including a 150-megawatt solar and storage facility.

Valuation and Growth Outlook

TXNM Energy’s strong earnings and growth prospects are reflected in its valuation metrics. The company currently trades at a P/E ratio of 19.66, slightly above the industry average, indicating that investors are pricing in its robust growth pipeline. The EV/EBITDA ratio of 11.59 further highlights the market’s confidence in its ability to execute on its capital plan. With a dividend yield of 2.27%, the stock offers a modest return for income investors while maintaining a focus on long-term growth. Management reaffirmed its 2025 guidance and updated the quarterly EPS distribution, with the third quarter accounting for over half of the annual EPS. The company’s focus on size and scale, coupled with its large growth plan, positions it well to navigate regulatory and operational challenges.

Strategic Position and Risks

TXNM Energy’s strategic focus on resiliency, renewable investments, and timely regulatory approvals positions it well for long-term growth. However, the company faces risks related to regulatory lag and the timely recovery of capital investments. As noted by Pat Vincent-Collawn during the call, “House Bill 5247 allows TNMP to group projects together, reducing regulatory lag and benefiting EPS by deferring costs to the balance sheet.” This legislative support, combined with the company’s growing capital plan, underscores its ability to deliver on its growth targets. With a net debt-to-EBITDA ratio of 6.28, the company maintains a moderate leverage profile, providing flexibility for future investments. Overall, TXNM Energy’s Q1 performance and outlook suggest a steady path forward, driven by robust demand and strategic capital allocation.

3. NewsRoom

Card image cap

Approval of Unopposed Stipulation in PNM 2028 Resource Application

Jun -30

Source: prnewswire.com

Card image cap

PNM, TNMP Receive Rate Approvals

May -15

Source: prnewswire.com

Card image cap

Recommendation to Approve Unopposed Stipulation in PNM 2025 Rate Request

Apr -09

Source: prnewswire.com

Card image cap

PNM and parties file Unopposed Stipulation in 2028 Resource Application

Mar -13

Source: prnewswire.com

Card image cap

PNM issues all-source RFP for new resources in 2029-2032

Dec -31

Source: prnewswire.com

Card image cap

PNM and parties file Unopposed Stipulation in 2025 Rate Request

Nov -26

Source: prnewswire.com

Card image cap

PNM files application for new resources in 2028

Nov -25

Source: prnewswire.com

Card image cap

PNM reaches Settlement in Principle in 2025 Rate Request

Nov -15

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.00%)

6. Segments

Public Service Company of New Mexico

Expected Growth: 8.0%

PNM Resources, Inc.'s Public Service Company of New Mexico segment growth is driven by increasing demand for electricity, investments in renewable energy, and grid modernization. Additionally, the company's focus on energy efficiency programs, rate base growth, and cost management initiatives contribute to its 8.0% growth.

Texas-New Mexico Power Company

Expected Growth: 8.0%

Texas-New Mexico Power Company's 8.0% growth is driven by increasing electricity demand from industrial and commercial customers, particularly in the Permian Basin. Additionally, investments in grid modernization and renewable energy sources, such as wind and solar, are contributing to growth. Furthermore, the company's focus on energy efficiency programs and rate base growth also support its expansion.

7. Detailed Products

Electricity

PNM Resources, Inc. generates and distributes electricity to residential, commercial, and industrial customers in New Mexico and Texas.

Natural Gas

The company provides natural gas services to customers in New Mexico, including transportation, storage, and supply of natural gas.

Renewable Energy

PNM Resources, Inc. invests in renewable energy sources, such as wind and solar power, to reduce carbon footprint and promote sustainability.

Energy Efficiency

The company offers energy-efficient solutions and programs to help customers reduce energy consumption and lower their energy bills.

Transmission and Distribution

PNM Resources, Inc. owns and operates transmission and distribution infrastructure to deliver electricity and natural gas to customers.

8. PNM Resources, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

PNM Resources, Inc. operates in the utility industry, which has a moderate threat of substitutes. While there are alternative energy sources, they are not yet widely adopted, and PNM Resources, Inc. has a strong presence in its market.

Bargaining Power Of Customers

PNM Resources, Inc. has a diverse customer base, and no single customer has significant bargaining power. Additionally, the company has a strong brand presence, which reduces the bargaining power of customers.

Bargaining Power Of Suppliers

PNM Resources, Inc. relies on a few large suppliers for its fuel and equipment needs. While the company has some bargaining power, the suppliers also have some leverage, resulting in a moderate bargaining power of suppliers.

Threat Of New Entrants

The utility industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to enter the market, reducing the threat of new entrants.

Intensity Of Rivalry

PNM Resources, Inc. operates in a highly competitive industry, with several large players competing for market share. The company must continually innovate and improve its services to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 67.77%
Debt Cost 3.95%
Equity Weight 32.23%
Equity Cost 5.73%
WACC 4.52%
Leverage 210.24%

11. Quality Control: PNM Resources, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Idacor

A-Score: 6.6/10

Value: 4.8

Growth: 5.1

Quality: 5.3

Yield: 6.0

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
CenterPoint Energy

A-Score: 6.4/10

Value: 5.7

Growth: 3.4

Quality: 6.0

Yield: 5.0

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
Alliant Energy

A-Score: 6.1/10

Value: 4.8

Growth: 4.2

Quality: 4.9

Yield: 6.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
Eversource

A-Score: 6.1/10

Value: 5.3

Growth: 3.3

Quality: 3.9

Yield: 8.0

Momentum: 7.0

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
CMS Energy

A-Score: 5.7/10

Value: 4.1

Growth: 4.1

Quality: 4.2

Yield: 6.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
PNM Resources

A-Score: 4.4/10

Value: 5.4

Growth: 4.2

Quality: 2.6

Yield: 6.0

Momentum: 5.0

Volatility: 3.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

41.77$

Current Price

41.77$

Potential

-0.00%

Expected Cash-Flows