Key Takeaways:
- Data Center Expansion: Xcel Energy doubled its contracted data center target from 3 GW to 6 GW by 2027, reinforcing a 20 GW large load pipeline and supporting a $60 billion capital investment plan through grid and generation expansion.
- Wildfire and Transmission Milestones: Xcel Energy finalized Marshall wildfire settlements covering over 4,000 claims and secured approval for a $2 billion 765 kV transmission line, strengthening regulatory clarity and extending investment visibility through 2030.
- Price Projection: Based on 8% revenue growth and 25% operating margins by 2028 with a 18x multiple, Xcel Energy could reach $98 per share by December 2028 from $78 today.
- Return Profile: This valuation implies a 26% total return from the current $78 price, equating to an 8% annualized return over roughly 3 years under normalized earnings growth assumptions.
Breaking Down the Case for Xcel Energy Inc.
Xcel Energy (XEL) enters 2026 with reaffirmed EPS guidance of $4 to $4 for 2026 after delivering $4 in ongoing EPS for 2025, supported by a 22% increase in quarterly profit driven by data center electricity demand.
Xcel stock’s revenue reached $15 billion in 2025 with operating income of $3 billion and operating margins near 20%, reflecting steady rate recovery and disciplined cost execution despite $300 million in wildfire settlement charges.
Meanwhile, operating expenses of Xcel stock rose to $12 billion in 2025 as infrastructure investments accelerated, yet normalized net income increased to $2 billion, underscoring the earnings resilience of the regulated model amid rising interest costs.
Management now targets 6 GW of contracted data center capacity by 2027 versus 3 GW previously, supported by a $60 billion 5 year capital plan and a $10 billion incremental investment pipeline.
Furthermore, in Q4 2025 earnings call, CEO Bob Frenzel stated, “We now expect to have 6 gigawatts of total data center capacity contracted by the end of 2027,” framing load growth as a structural earnings driver extending into the 2030s.
Recent approvals for a $2 billion 765 kV transmission line and completion of major solar and gas conversions position the utility to align reliability investments with 3% near term sales growth and 9% long term EPS expansion targets.
With Xcel stock at $78 per share and 18x forward earnings, it now discounts roughly 5% to 6% earnings growth even as management projects 9% average EPS growth through 2030, setting up a debate around whether incremental load converts into sustained valuation expansion.
What the Model Says for XEL Stock
Xcel Energy’s regulated model, 19.6% operating margins, and 3% sales growth expectations anchor market assumptions around steady but capital-intensive expansion.
The model applies 8.1% revenue growth, 24.7% margins, and a 17.7x exit multiple, producing a $97.79 target price by 2028 under market assumptions.
This implies 25.5% total upside from $77.92 and an 8.2% annualized return, reflecting moderate capital appreciation relative to regulated utility risk profiles.
Therefore, the model signals a Sell, as an 8.2% annualized return fails to exceed a 10% equity hurdle rate despite projected 9% EPS growth.
An 8.2% annualized return sits below a 10% equity hurdle rate and reflects limited multiple expansion at 17.7x, indicating capital preservation rather than meaningful risk-adjusted appreciation.
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 Xcel stock:
1. Revenue Growth: 8.1%
Xcel Energy stock revenue grew 9.1% over 1 year, while 5 year growth averaged 4.9% as regulated rate recovery offset volume volatility.
Current estimates show 8.6% revenue growth for 2026 on $15.93 billion of sales, supported by data center contracts totaling 6 GW and expanded transmission investment.
Sustaining 8.1% requires continuous rate approvals, grid execution, and incremental large load conversion, as capital intensity near $60 billion elevates execution risk and revenue timing sensitivity.
This is below the 1 year revenue growth of 9.1%, as regulated load growth moderates and capital cycles extend, and valuation compresses quickly if realized growth reverts toward the 4.9% 5 year trend.
2. Operating Margins: 24.7%
Xcel Energy stock reported 17.8% operating margins over 1 year and 19.6% in 2025, reflecting rate design and infrastructure cost recovery within regulated jurisdictions.
Forward estimates show EBIT margins rising toward 22.2% by 2026 on operating income of $3.53 billion, supported by higher sales mix and capitalized transmission expansion.
Reaching 24.7% assumes disciplined expense growth on $12 billion of operating costs and sustained load absorption, while interest expense and wildfire mitigation outlays constrain incremental leverage.
This is above the 1 year operating margin of 17.8%, as fixed cost absorption depends on incremental data center ramp and regulatory timing, and margin disappointment compresses equity returns disproportionately.
3. Exit P/E Multiple: 17.7x
Xcel Energy stock trades at a market assumption of 18.93× NTM P/E as of 2/11/26, compared with a 5 year historical average near 19.3×.
The model applies a 17.7× exit multiple to 2028 normalized EPS of $4.12, capitalizing earnings under steady 8.1% revenue growth and 24.7% margins.
This multiple embeds no re rating and assumes earnings durability rather than valuation expansion, as execution already carries higher margins and incremental load into terminal estimates.
This is below the 1 year P/E of 17.8×, as terminal valuation discounts capital intensity and regulatory risk, and any earnings shortfall compounds through both margin and multiple compression.
What Happens If Things Go Better or Worse?
Xcel Energy stock valuation reflects data center load additions, regulatory approvals, and cost discipline through 2030.
- Low Case: If data center ramp slows and regulatory approvals lag, revenue grows 6.9% and net margins hold near 17.6% → 5.6% annualized return.
- Mid Case: With transmission buildout and contracted load executing steadily, revenue grows 7.7% and net margins near 17.4% → 9.0% annualized return.
- High Case: If 6 GW contracts scale efficiently and cost control holds, revenue grows 8.5% and margins near 17.3% → 12.0% annualized return.
How Much Upside Does Xcel Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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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!
