Value
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.2 |
| P/S | 9.0 |
| EV/EBITDA | 4.7 |
| Fwd P/E | 7.7 |
| PEG | 3.7 |
| Analyst target | 4.0 |
- ▸Forward P/E: 15.8x
- ▸PEG: 3.08
EXC · Why this verdict
Why Exelon (EXC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.9/10
ConfidenceHIGH
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Four consecutive quarters of beating analyst estimates with an average positive earnings surprise of approximately 6.8% demonstrates consistent operational delivery and a management team that guides conservatively and executes above expectation. Earnings | The beat streak extends with average positive surprise maintained above 3% over the next 12 months, confirming the execution track record is durable. | →Stable |
| CounterWith the stock trading above its near-term price target and carrying an unfavorable risk/reward ratio, consistent earnings delivery appears already reflected in price — additional beats may no longer translate into meaningful incremental upside. | ||
The dividend payout ratio stands at approximately 364% of earnings, meaning the distribution far exceeds reported profits and is sustainable only if non-cash credits or regulatory recovery mechanisms bridge the gap — a fragile structural position particularly given deeply negative free cash flow. Catalyst breakdown | The payout ratio falls below 150% of earnings over the next 12 months as earnings grow and/or the distribution is reset to a more sustainable level. | →Stable |
| CounterRegulated utilities often calibrate dividends based on regulatory-approved cash flows and rate base recovery rather than GAAP earnings, and the four consecutive earnings beats suggest the underlying regulated income stream remains intact despite the elevated ratio. | ||
Free cash flow is deeply negative at approximately 101% below net income, meaning reported earnings are not converting into cash — a pattern that, combined with a debt-to-equity of 1.7, leaves the balance sheet with limited cushion if operating conditions soften. Quality breakdown | Free cash flow relative to net income rises above 0% over the next 12 months, confirming the earnings base is generating distributable cash. | →Stable |
| CounterAs a regulated electric utility, the business earns revenues from a state-approved rate base, and the four consecutive earnings beats suggest the underlying regulated earnings remain intact even when free cash flow conversion is temporarily impaired. | ||
A debt-to-equity ratio of 1.7 combined with negative free cash flow creates a balance sheet that offers limited flexibility to absorb unexpected costs or invest opportunistically without accessing capital markets, compounding the quality concerns already reflected in the overall assessment. Bear case | Debt-to-equity falls below 1.3 over the next 12 months as free cash flow improves and debt matures or is partially repaid. | →Stable |
| CounterRegulated utilities characteristically carry elevated leverage supported by stable rate-approved revenues that reduce the financial risk typically associated with high debt loads, and the regulated income stream provides predictable debt service capacity. | ||
Four consecutive quarters of beating analyst estimates with an average positive earnings surprise of approximately 6.8% demonstrates consistent operational delivery and a management team that guides conservatively and executes above expectation.
→StableEarnings
- Expectation
- The beat streak extends with average positive surprise maintained above 3% over the next 12 months, confirming the execution track record is durable.
CounterWith the stock trading above its near-term price target and carrying an unfavorable risk/reward ratio, consistent earnings delivery appears already reflected in price — additional beats may no longer translate into meaningful incremental upside.
The dividend payout ratio stands at approximately 364% of earnings, meaning the distribution far exceeds reported profits and is sustainable only if non-cash credits or regulatory recovery mechanisms bridge the gap — a fragile structural position particularly given deeply negative free cash flow.
→StableCatalyst breakdown
- Expectation
- The payout ratio falls below 150% of earnings over the next 12 months as earnings grow and/or the distribution is reset to a more sustainable level.
CounterRegulated utilities often calibrate dividends based on regulatory-approved cash flows and rate base recovery rather than GAAP earnings, and the four consecutive earnings beats suggest the underlying regulated income stream remains intact despite the elevated ratio.
Free cash flow is deeply negative at approximately 101% below net income, meaning reported earnings are not converting into cash — a pattern that, combined with a debt-to-equity of 1.7, leaves the balance sheet with limited cushion if operating conditions soften.
→StableQuality breakdown
- Expectation
- Free cash flow relative to net income rises above 0% over the next 12 months, confirming the earnings base is generating distributable cash.
CounterAs a regulated electric utility, the business earns revenues from a state-approved rate base, and the four consecutive earnings beats suggest the underlying regulated earnings remain intact even when free cash flow conversion is temporarily impaired.
A debt-to-equity ratio of 1.7 combined with negative free cash flow creates a balance sheet that offers limited flexibility to absorb unexpected costs or invest opportunistically without accessing capital markets, compounding the quality concerns already reflected in the overall assessment.
→StableBear case
- Expectation
- Debt-to-equity falls below 1.3 over the next 12 months as free cash flow improves and debt matures or is partially repaid.
CounterRegulated utilities characteristically carry elevated leverage supported by stable rate-approved revenues that reduce the financial risk typically associated with high debt loads, and the regulated income stream provides predictable debt service capacity.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Exelon has delivered four consecutive earnings beats averaging approximately 6.8% above estimates, but the combination of deeply negative free cash flow conversion, a dividend payout ratio of 364%, leverage at a debt-to-equity of 1.7, and a stock already trading above its near-term price target creates a risk profile that outweighs the positive earnings momentum.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.3 |
| ROA | 1.9 |
| Gross margin | 4.5 |
| Op margin | 8.9 |
| Net margin | 5.6 |
| Current ratio | 3.8 |
| FCF quality | 0.0 |
| Moat | 5.0 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: -101% FCF/NI
- ▸No competitive moat
Growth
3.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.5 |
| EPS growth | 1.9 |
Momentum
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 8.9 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 5.9 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.5 |
| erm sentiment | 5.0 |
Insider
5.1/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.2 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.8 |
| quality rank | 3.8 |
| growth rank | 5.4 |
Technical
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.2 |
| 52w position | 9.1 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 5.6 |
| volatility | 7.7 |
| put call | 3.6 |
| implied vol | 4.3 |
| beta | 10.0 |
| debt equity | 3.5 |
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.9 |
| dividend safety | 5.5 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 351.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.0>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:26d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.9=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.91
Upside
-7.1%
Downside
7.8%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 67, MACD bullish
EdgeCatalyst-Driven — Earnings in 26d with 4/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.9 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 6.3) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.9=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.91 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 6.3, Risk (lower is worse) at 6.1, and Momentum at 6.0; the weakest are Technical at 3.1, Growth at 3.2, and Quality at 4.4. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.91 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, breaking the four-quarter beat streak.
- P2Elevated Dividend Payout Ratio
Trip ifDividend payout ratio falls below 150% of earnings for 2 consecutive quarters.
- P3Negative Cash Flow Conversion
Trip ifFree cash flow relative to net income rises above 0% for 2 consecutive quarters.
- P4Leverage Balance Sheet Constraint
Trip ifDebt-to-equity ratio falls below 1.3 for 2 consecutive quarters.