How Duke’s Valuation Change If Its Customer Growth Rate Changes?

-2.70%
Downside
96.71
Market
94.10
Trefis
DUK: Duke Energy logo
DUK
Duke Energy

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.

duke customers impact

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.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Duke Energy
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