How Duke’s Valuation Change If Its Customer Growth Rate Changes?
Duke Energy (NYSE: DUK) generates over 90% of its valuation from its U.S. Franchised Electric and Gas Division according to our estimates. The company has had problems increasing per capita consumption of electricity generated in recent years as a result of changing demographic trends, which resulted in load sharing, and energy saving innovation in much of the equipment used by customers. As a result, utility companies have had to with each other to retain customers for growth by offering them ways to save on their energy consumption. This is the biggest driver of revenue growth for the company now and its importance is underscored by the table below.
If the company loses customers at a rate of 1% per year, it could result in a 19.3% reduction in our valuation for the company. In contrast, if the customer growth rate is 2% instead of 1% over our review period, this could result in a 10.3% increase in our valuation for the company.
Have more questions about Duke? See the links below:
- How Much Did Duke Energy’s Revenue & EBITDA Grow In The Last Five Years?
- How Much Can Duke Energy’s Revenue Grow In The Next Five Years?
- What Is Duke Energy’s Fundamental Value Based On Expected 2016 Results?
- How Has Duke Energy’s Revenue Composition Changed In The Last Five Years?
- Duke Energy Jumps 10% On Takeover Rebuff News – What’s Going To Happen Now?
- Duke Energy Could Have 20% Upside. What Are The Catalysts?
- Duke, Southern, Dominion: Utility Stocks Continue To Underperform. Time To Buy?
- Is Ameren’s 2x Price Rise Compared To Duke Energy Justified?
- Why NextEra’s 5x Price Rise Versus Duke Energy Is Not Justified
- Duke, NextEra, Southern: Are Big Utilities Riskier Through This Downturn?
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