Key Stats for D Stock
- Past week’s performance: -1.9%
- 52-week range: $56 to $73
- Valuation model target price: $77
- Implied upside: 14.8% over 2.4 years
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Virginia’s Data Center Machine Keeps Humming
Dominion Energy (D) shares slipped slightly this week, but that quiet move hides a genuinely strong quarter. The stock is still up about 26% over the past year, so investors clearly like what they see in Virginia’s data center boom.
Dominion is a regulated electric and gas utility, and it serves customers across Virginia, North Carolina, and South Carolina. Its biggest growth driver right now is data centers, because Northern Virginia has become the world’s largest hub for data center capacity, and Dominion powers most of it.
Q2 operating revenue rose 18% year over year to $4.48 billion, and that beat the $4.04 billion consensus estimate easily. Operating EPS came in at $0.79, while management reaffirmed full year guidance. The company also pointed to more than 53 gigawatts of data center capacity in various stages of contracting, including 12 gigawatts already under signed agreements. That backlog has grown by 5 gigawatts since the start of the year alone.
CEO Robert Blue explained the trend clearly on the earnings call. He said Dominion’s customers “consistently tell us that many of their highest value workloads need to be built and need to stay in Virginia,” because of the state’s unique network density and connectivity. He added that Dominion is bringing these customers onto its system “in the right way, protecting existing customers from cost shifts.”
But rising fuel costs are the flip side of this growth story. Fuel expenses in Virginia have climbed nearly 90% over five years, since demand keeps straining the grid, and that raises real questions about affordability going forward.
If Dominion’s merger with NextEra Energy clears review, the combined company would become the largest regulated utility in the country. Going forward, hearings starting this November in Virginia will be the next big milestone to watch.
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Weighing Growth Against Merger Risk
Under valuation model assumptions realized through 12/31/28, the stock is modeled using:
- Revenue Growth (CAGR): 7.6%
- Operating Margins: 34.2%
- Exit P/E Multiple: 17.1x
Based on these inputs, the model estimates a $77 target price, implying 14.8% total upside from the current share price and a 6.0% annualized return.
Dominion’s growth story looks simple on paper. Data centers keep expanding the rate base, and regulated utilities usually earn a return on that new investment. But a 6.0% annualized return sits closer to moderately attractive than truly undervalued, so the gap really comes down to two things: fuel costs and merger uncertainty.
Margins have room to grow if Dominion keeps collecting under its large load framework, since that structure is designed to make data center customers pay their fair share of infrastructure costs. Management says this should protect margins even while fuel costs keep climbing.
The NextEra merger adds another layer of complexity, though. While the deal could unlock real scale benefits, it also brings execution risk tied to regulatory timelines across multiple states. Because Virginia’s governor has intervened in the review process, some investors may keep discounting Dominion’s shares until that uncertainty clears.
Against its own trading history, Dominion’s current multiple sits roughly in line with its five year average. So the market has not fully priced in either the upside from data center growth or the downside risk from merger delays yet.
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How Dominion Stacks Up Against Fellow Utilities
Dominion’s closest comparison is NextEra Energy (NEE), its proposed merger partner and one of the largest regulated and renewable utilities in the country. NextEra also topped its own Q2 profit estimates on similar data center demand, so this trend clearly extends across the whole industry.
American Electric Power (AEP) offers another useful benchmark, since it operates in overlapping data center corridors like Ohio and Texas. AEP’s forward P/E of roughly 19x sits above Dominion’s 17.1x model assumption, and that gap partly reflects AEP’s larger contracted load pipeline of 69 gigawatts through 2030, compared with Dominion’s 53 gigawatts across all contracting stages.
Dominion’s modeled revenue growth of 7.6% compares favorably with its own trailing five year average of just 3.1%. So the data center wave has clearly reaccelerated growth for a utility that had been growing slowly for years, even as the NextEra merger grabs most of the headlines.
What’s Driving Dominion Stock Going Forward?
The clearest near term catalyst is the NextEra merger timeline. Hearings begin in Virginia this November and in South Carolina in December, and final orders are expected around January 2027. But any sign of delay or added conditions could move the stock sharply in either direction.
Data center contract growth remains the core engine here. Dominion plans to refresh its detailed backlog disclosures later this year, so any acceleration beyond the current 53 gigawatt pipeline would support the bullish case built into this model.
The Coastal Virginia Offshore Wind project, now 81% complete, is another catalyst worth tracking. Since further schedule slippage already pushed the final turbine installation to year end 2027, costs have risen about 2% as a result.
Regulatory outcomes across Dominion’s territory will matter too, because ongoing rate cases and the large load cost protection framework will decide how much of this data center growth actually reaches earnings.
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Should You Invest in Dominion Energy?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
