Last Update 24 Oct 25
Analysts have maintained their price target for TXNM Energy at $61.25 per share. They cite stable fair value estimates, while also noting slightly higher expected revenue growth, balanced by a modest decrease in profit margin forecasts.
Analyst Commentary
Analysts continue to weigh both the strengths and risks associated with TXNM Energy, reflecting a balanced outlook in their commentaries regarding the company's valuation and strategic direction.
Bullish Takeaways- Bullish analysts highlight the reaffirmed price target, indicating confidence in the company’s current fair value and underlying fundamentals.
- The expected closure of the Blackstone Infrastructure acquisition provides a clear timeline for investors and supports share price stability.
- Projections for slightly higher revenue growth suggest ongoing operational momentum, which could drive incremental value if margins stabilize.
- The company’s ability to attract substantial buyout interest is seen as a sign of resilience and long-term strategic appeal within the sector.
- Bearish analysts caution that modestly lower profit margin expectations could offset anticipated revenue gains, potentially limiting near-term earnings growth.
- The Neutral rating signals a belief that shares are fairly valued at current levels, reducing the likelihood of significant upside in the short run.
- Execution risks surrounding the completion and integration of the Blackstone Infrastructure deal could present challenges for future performance if not managed carefully.
What's in the News
- TXNM Energy's board is scheduled to meet on September 23, 2025, to declare the regular quarterly dividend of $0.4075 per share on common stock (Board Meeting).
- The company has filed applications with regulatory authorities for approval of its proposed acquisition by Blackstone Infrastructure. The filing outlines benefits for customers and communities in New Mexico, including a $105 million rate credit over four years, $10 million for the PNM Good Neighbor Fund over ten years, $35 million for economic development, and $25 million to support innovative, carbon-free technologies (Regulatory Authority – Compliance).
- TXNM Energy has launched a $200 million follow-on equity offering through an at-the-market transaction, with proceeds expected to bolster growth initiatives (Follow-on Equity Offerings).
Valuation Changes
- Fair Value Estimate remains unchanged at $60.08 per share. This reflects stable assessments of the company’s intrinsic worth.
- Discount Rate is steady at 6.78 percent, indicating no significant change in perceived investment risk.
- Revenue Growth outlook has risen from 6.64 percent to 7.96 percent, showing an increase in projected top-line expansion.
- Net Profit Margin forecast has decreased modestly from 18.98 percent to 18.29 percent. This suggests slightly lower expected profitability.
- Future P/E Ratio prediction remains constant at 20.18x, indicating consistent expectations for future earnings valuation.
Key Takeaways
- State support and strong capital investment in transmission and renewables will drive sustained revenue and earnings growth opportunities.
- Regulatory mechanisms and resiliency initiatives improve earnings predictability and reduce risks from large infrastructure deployments.
- Mounting grid investment needs, regulatory constraints, and shifting energy trends threaten TXNM Energy’s earnings stability, revenue growth, and cost recovery flexibility.
Catalysts
About TXNM Energy- Through its subsidiaries, provides electricity and electric services in the United States.
- Accelerated demand growth driven by data centers and commercial expansion in Texas, combined with state-level initiatives facilitating infrastructure build-out, signals increasing electricity sales and sustained revenue expansion.
- Approval and timely cost recovery of over $546 million in capital improvements through resiliency plans and transmission upgrades will boost the regulated rate base, driving predictable increases in EBITDA and net income via scheduled rate hikes.
- Legislative support for prebuilding infrastructure and the introduction of rate mechanisms (like the unified tracker and resilience recovery tools) will reduce regulatory lag, improve earnings stability, and mitigate risks from large capital deployment, supporting earnings growth.
- Robust capital investment opportunities in transmission and resource development—highlighted by an unmodeled need for at least 500 megawatts of new capacity by 2030 and up to 2,900 megawatts by 2032—provide a pipeline for long-term asset base and revenue growth.
- Strategic focus on renewable energy and grid modernization, with stakeholder-backed investments in solar, storage, and resiliency, positions TXNM Energy to benefit from decarbonization policies while reducing fuel cost volatility and supporting margin expansion.
TXNM Energy Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming TXNM Energy's revenue will grow by 6.6% annually over the next 3 years.
- Analysts assume that profit margins will increase from 8.7% today to 19.0% in 3 years time.
- Analysts expect earnings to reach $467.6 million (and earnings per share of $4.77) by about September 2028, up from $177.4 million today. The analysts are largely in agreement about this estimate.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.8x on those 2028 earnings, down from 33.8x today. This future PE is lower than the current PE for the US Electric Utilities industry at 19.9x.
- Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.
TXNM Energy Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Elevated capital expenditure requirements for grid resilience, transmission build-out, and compliance with wildfire prevention and mitigation legislation are likely to pressure TXNM Energy’s free cash flow and net margins in the medium term, especially given the lag between investment and regulatory recovery.
- Potential regulatory exposure from the implementation of new rate mechanisms, rate design updates after a seven-year gap, and customer affordability initiatives (such as low-income rate tools) may restrict TXNM Energy’s flexibility to pass through higher costs, increasing earnings volatility.
- Geographic concentration in New Mexico and Texas exposes the company to extreme weather events, wildfire-related liabilities, and region-specific regulatory or demographic shocks, risking revenue stability and higher insurance or compliance costs.
- Accelerated penetration and adoption of distributed energy resources (DERs), like rooftop solar and batteries, could reduce future baseline load growth and dampen long-term revenue expansion for centralized utilities like TXNM Energy, despite current data center-driven demand strength.
- Ongoing reliance on regulatory and legislative action for approval of significant transmission and resource investments, along with uncertainty over the pace and terms of capital recovery (especially for projects not yet in the five-year plan), creates risk around capital allocation, delayed project returns, and overall earnings trajectory.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $58.893 for TXNM Energy based on their expectations of its future earnings growth, profit margins and other risk factors.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.5 billion, earnings will come to $467.6 million, and it would be trading on a PE ratio of 19.8x, assuming you use a discount rate of 6.8%.
- Given the current share price of $56.84, the analyst price target of $58.89 is 3.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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