Key Takeaways:
- Xcel Energy (XEL) reported Q1 2026 net income up 15.1% to $556 million and EPS of $0.89, slightly beating estimates on stronger electricity sales.
- The company signed a deal to power a new Google data center in Minnesota, adding a significant new commercial load customer to its growing electricity demand base.
- XEL stock could rise from $81 to around $93 per share by December 2028, representing a near 15% total return.
- That implies an annualized return of around 5.6% per year, consistent with regulated utility averages and supported by a $60 billion five-year capital investment plan.
What Happened?
Xcel Energy Inc. (XEL) reported Q1 2026 EPS of $0.89, up 6% year over year, as net income rose 15.1% to $556 million on stronger electricity sales. Revenue came in slightly below analyst estimates, but the earnings beat reflected favorable rate case outcomes and effective cost management.
The stock trades near $81, close to its 52-week high, as investors cheer growing data center demand. Xcel is a regulated electric and natural gas utility serving customers across Minnesota, Colorado, Texas, and New Mexico.
Xcel Energy announced an agreement to supply power to a new Google data center in Minnesota, representing one of the company’s most notable large commercial load wins in recent history. The company also reached an agreement with NextEra Energy to deliver new generation capacity and enable large load growth across Xcel’s service territories.
Xcel launched an equity distribution agreement for up to $4.3 billion, supporting its $60 billion five-year capital plan. The plan encompasses grid modernization, renewable energy additions, and infrastructure upgrades across all of its service territories.
Xcel’s NSP-Minnesota settled a $38 million gas rate hike, while SPS filed for a $168 million New Mexico rate increase. Rate cases let utilities seek higher customer charges and recover infrastructure investment costs.
Here’s why Xcel Energy stock could offer solid capital returns through 2030 as its core business drivers support shareholder value.
What the Model Says for XEL Stock
We analyzed Xcel Energy’s upside potential based on its regulated utility platform, rising data center demand, and $60 billion capital plan.
Based on estimates of 8.4% annual revenue growth, 25.4% operating margins, and a normalized P/E multiple of 17.6x, the model projects Xcel Energy stock could rise from $81 to around $93 per share.
That would be a near 15% total return, or a 5.6% annualized return over the next 2.6 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for XEL stock:
1. Revenue Growth: 8.4%
Xcel Energy’s revenue has grown steadily as it executes one of the largest capital plans in U.S. regulated utilities. One-year revenue growth of about 9% reflects approved rate cases and higher electricity demand from data center customers.
Data center demand from companies like Google adds a new load growth driver beyond traditional utility planning. This could support above-average revenue growth for utilities with strong grid infrastructure in markets like Minnesota and Colorado.
Based on analysts’ consensus estimates, we used 8.4% annual revenue growth. This reflects rate base growth from the $60 billion capital plan and rising large commercial load from data center and technology customers. Rate case execution risk and construction cost overruns are the primary downside risks to this growth projection.
2. Operating Margins: 25.4%
Xcel Energy’s LTM EBIT margin is around 19.9%, reflecting a well-run regulated utility. Operating margins in the regulated utility sector are relatively predictable because both costs and revenues are subject to regulatory oversight.
Historically, Xcel has operated with EBIT margins in the high-teens to low-twenties, reflecting its consistent ability to earn authorized rates of return on a growing rate base. Margin expansion potential exists as data center load growth improves capacity utilization across the company’s generation and transmission assets.
Based on analysts’ consensus estimates, we used 25.4% operating margins. This reflects improvement as rate base growth earns regulated returns and data center contracts add higher-margin revenue. Unfavorable rate case outcomes or construction cost overruns could slow the pace of margin improvement through the forecast period.
3. Exit P/E Multiple: 17.6x
Xcel Energy currently trades at about 19x NTM P/E, in line with regulated utility peers and supported by data center growth. The stock has re-rated modestly higher over the past year as investors recognized utilities as key infrastructure for AI-driven computing.
Historically, regulated utilities like Xcel have traded between 16x and 22x earnings, and the current multiple sits in the middle of that range. Xcel’s above-average capital plan and exposure to high-growth large commercial load support a premium to slower-growing utility peers.
Based on analysts’ consensus estimates, we used a 17.6x exit P/E multiple. This implies slight multiple compression from current levels as growth becomes more fully priced in over the next several years. Positive outcomes from pending rate cases or accelerating data center contract wins could support a higher multiple assumption over time.
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What Happens If Things Go Better or Worse?
Different scenarios for XEL stock through 2035 show varied outcomes based on rate case outcomes, data center load growth, and capital plan execution (these are estimates, not guaranteed returns):
- Low Case: Rate cases disappoint, and capital costs rise, limiting authorized returns and slowing dividend growth → 5.4% annual returns
- Mid Case: Data center contracts scale and the $60 billion capital plan earns authorized returns on schedule → 7.7% annual returns
- High Case: Large commercial load surges, rate increases are approved ahead of schedule, and the earnings multiple expands modestly → 9.7% annual returns
Going forward, Xcel Energy’s return profile aligns with what investors typically expect from high-quality regulated utilities: steady, predictable, and inflation-protected rather than spectacular. The near-term model projects around 5.6% annualized returns through December 2028, while the longer-term mid-case scenario projects 7.7% annually through 2035.
But Xcel’s dividend yield of around 3.0% and the growing data center demand story make it a compelling choice for income-oriented investors who value capital stability alongside incremental growth.
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Should You Invest in Xcel Energy?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up XEL, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track XEL alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
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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!
