Dominion Resources Sum-Of-The-Parts Valuation, LNG Multiples, And An MLP: 15%-40% Upside
- Dominion Resources, Inc. (“D”) appears over-valued relative to its large cap regulated peers. However, when adjusted for earnings growth and dividend yield, D trades in-line with its comps.
- D’s Sum-of-the-Parts (“SOTP”) valuation suggest the stock is fairly valued with 10% to 30% upside.
- When you combine this with the valuation look-through from comparable pure-play US LNG terminal multiples in Australia and North America, there is a total upside of 15% to 40%.
- The MLP crystallizes for investors the contribution of LNG to the SOTP and may act as a pricing catalyst for bridging the valuation gap with the current D share price.
- When the current bull market in growth stocks comes to an end, we would expect that a relatively high-growth utility like Dominion will outperform "glamour" growth stocks.