Is Duke Energy’s Recent Slowdown Creating a Long Term Opportunity for Investors in 2025?
December 25, 2025
Duke Energy shares have delivered a solid 11.7% return over the past year and are up 57.8% over five years, showing that steady utility stocks can still quietly compound. Even with a flat 7 day move and a 3.8% pullback over the last month, the stock is still up 9.0% year to date. This raises the question of whether the recent cooling is a pause or a warning.
Some of this price action has been tied to shifting expectations around interest rates and income focused stocks. Utilities like Duke often trade in and out of favor as bond yields move. In addition, ongoing infrastructure investments and regulatory developments in its core service regions have helped frame the market narrative around Duke as a stable, long term cash generator rather than a high growth story.
On our valuation framework, Duke Energy currently scores 3 out of 6 on our undervaluation checks. This suggests the market may be roughly in the right ballpark but not screamingly cheap or wildly overpriced. Next, we will walk through what those checks actually look at and how traditional valuation methods stack up, before finishing with a more holistic way to think about Duke Energy’s long term value.
Find out why Duke Energy’s 11.7% return over the last year is lagging behind its peers.
The Dividend Discount Model estimates what a stock is worth by projecting all future dividend payments and discounting them back into today’s dollars. For Duke Energy, the model starts with an annual dividend per share of about $4.49 and an estimated return on equity of roughly 8.8%. However, the payout ratio is already about 101.9%, meaning Duke is paying out essentially all, and slightly more than, its earnings as dividends.
Using the standard DDM formula, the implied long term dividend growth rate comes out slightly negative at about minus 0.2%, based on the calculation of (1 minus payout ratio) multiplied by ROE. That leads to an intrinsic value estimate of roughly $63.07 per share. Compared with the current market price, this DDM output implies the stock is about 86.3% overvalued. In other words, investors appear to be paying a significant premium for Duke’s perceived stability and income profile.
Result: OVERVALUED
Our Dividend Discount Model (DDM) analysis suggests Duke Energy may be overvalued by 86.3%. Discover 901 undervalued stocks or create your own screener to find better value opportunities.
For a mature, consistently profitable utility like Duke Energy, the price to earnings multiple is a useful way to gauge what investors are willing to pay for each dollar of earnings. In general, companies with stronger growth prospects and lower perceived risk can justify a higher PE ratio, while slower growth or higher risk usually calls for a lower, more conservative PE.
Duke currently trades on a PE of about 18.6x. That sits slightly below the Electric Utilities industry average of roughly 19.6x, and meaningfully below a broader peer group average of around 26.4x. This suggests the market is not putting a premium multiple on Duke despite its scale and stability. To refine this view, Simply Wall St uses a proprietary Fair Ratio, which estimates what a reasonable PE should be after factoring in company specific drivers such as earnings growth, profit margins, industry, market cap and key risks.
For Duke, this Fair Ratio comes out at about 24.2x, well above the current 18.6x. On this framework, the market appears to be pricing Duke more conservatively than its fundamentals might warrant, pointing to some valuation upside if sentiment normalises.
Result: UNDERVALUED
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1459 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework on Simply Wall St’s Community page that lets you turn your view of Duke Energy into a structured story by linking your assumptions for future revenue, earnings and margins to a financial forecast, converting that forecast into a fair value, and dynamically updating it as new news or earnings arrive. This allows you to easily compare your Fair Value to today’s price to inform your decision while also seeing how different investors can reasonably disagree. For example, some Narratives on Duke argue that Southeast data center demand and supportive regulation justify fair values near $136 per share, while more cautious Narratives, focused on capital intensity, regulatory risk and the energy transition, land much lower, all using the same tool but different, clearly articulated perspectives.
Do you think there’s more to the story for Duke Energy? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include DUK.
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