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TXNM Energy, Inc.

Intrinsic Value Analysis (Discounted Cash Flow)Industry: Regulated ElectricSector: Utilities

Fair Value Summary

Current Price$58.73
5Y Range-84.69 – -77.76
5Y Selected-81.22
(-) Safety Margin68.97%
5Y Buy Price$-25.20
Upside (to Buy Price)-142.91%
10Y Range-85.77 – -78.88
10Y Selected-82.32
(-) Safety Margin68.97%
10Y Buy Price$-25.55
Upside (to Buy Price)-143.50%

Company Predictability & Safety

MetricValue
Revenue R2 (5Y)0.3910
Revenue R2 (10Y)0.5929
Net Income R2 (5Y)0.0075
Net Income R2 (10Y)0.2074
EBITDA R2 (5Y)0.4699
EBITDA R2 (10Y)0.6580
FCF R2 (5Y)0.8927
FCF R2 (10Y)0.9259
Safety Score0.3103

DA 10-Year Projection

Metric2025202620272028202920302031203220332034
% Growth4.34%4.30%4.26%4.22%4.19%4.15%4.11%4.07%4.04%4.00%
Revenue2,056.672,145.082,236.492,330.962,428.552,529.322,633.332,740.632,851.282,965.33
EBITDA973.951,015.811,059.101,103.841,150.051,197.771,247.031,297.841,350.241,404.25
D&A-386.80-403.43-420.62-438.39-456.74-475.69-495.26-515.44-536.25-557.70
EBIT587.14612.38638.48665.45693.31722.08751.77782.40813.99846.55
Pro forma Taxes-31.58-32.94-34.34-35.79-37.29-38.84-40.43-42.08-43.78-45.53
NOPAT555.57579.45604.14629.66656.02683.24711.34740.32770.21801.02
Capital Expenditures-1,029.40-1,073.65-1,119.40-1,166.69-1,215.54-1,265.97-1,318.03-1,371.73-1,427.12-1,484.20
NWC Investment-3.81-3.95-4.08-4.22-4.36-4.50-4.64-4.79-4.94-5.09
(+) D&A386.80403.43420.62438.39456.74475.69495.26515.44536.25557.70
Free Cash Flow-90.85-94.72-98.72-102.86-107.13-111.53-116.08-120.77-125.60-130.58
Diluted Shares Outstanding92,434,250.0092,434,250.0092,434,250.0092,434,250.0092,434,250.0092,434,250.0092,434,250.0092,434,250.0092,434,250.0092,434,250.00

Discounting Periods

MetricDec-25Dec-26Dec-27Dec-28Dec-29Dec-30Dec-31Dec-32Dec-33Dec-34
Period Start9/30/251/1/261/1/271/1/281/1/291/1/301/1/311/1/321/1/331/1/34
Period End12/31/2512/31/2612/31/2712/31/2812/31/2912/31/3012/31/3112/31/3212/31/3312/31/34
Mid-Point11/15/257/2/267/2/277/1/287/2/297/2/307/2/317/1/327/2/337/2/34
Time (t)0.100.461.462.463.464.465.466.467.468.46
Valuation Date1/16/26

Base Case Projected Flows

WACC: 9.10%Terminal Growth: 2.30%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.880.810.740.680.620.570.520.48
PV UFCF-90.06-91.00-86.94-83.02-79.26-75.64-72.16-68.81-65.59-62.51
Raw: -1,611.20
-1,141.29
Raw: -1,963.89
-900.08

Base Case Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value-1,571.57-1,675.07
(-) Net Debt5,865.525,865.52
Equity Value-7,437.09-7,540.58
(/) Shares Out92.4392.43
Fair Value$-80.46$-81.58
(-) Safety Margin68.97%68.97%
Buy Price$-24.97$-25.31
Current Price$58.73$58.73
Upside (to Buy Price)-142.51%-143.10%

Conservative Projected Flows

WACC: 10.10%Terminal Growth: 1.80%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.870.790.720.650.590.540.490.44
PV UFCF-89.98-90.62-85.79-81.18-76.80-72.62-68.65-64.87-61.28-57.86
Raw: -1,313.62
-897.48
Raw: -1,601.17
-676.23

Conservative Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value-1,321.84-1,425.88
(-) Net Debt5,865.525,865.52
Equity Value-7,187.36-7,291.40
(/) Shares Out92.4392.43
Fair Value$-77.76$-78.88
(-) Safety Margin68.97%68.97%
Buy Price$-24.13$-24.48
Current Price$58.73$58.73
Upside (to Buy Price)-141.08%-141.68%

Aggressive Projected Flows

WACC: 8.10%Terminal Growth: 2.80%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.890.830.760.710.650.600.560.52
PV UFCF-90.14-91.39-88.11-84.93-81.83-78.81-75.88-73.03-70.26-67.57
Raw: -2,077.17
-1,526.00
Raw: -2,531.86
-1,260.18

Aggressive Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value-1,962.40-2,062.12
(-) Net Debt5,865.525,865.52
Equity Value-7,827.91-7,927.64
(/) Shares Out92.4392.43
Fair Value$-84.69$-85.77
(-) Safety Margin68.97%68.97%
Buy Price$-26.28$-26.61
Current Price$58.73$58.73
Upside (to Buy Price)-144.74%-145.31%

Reverse DCF: Market Implied Growth

Current Price$58.73
WACC Used9.1%
IMPLIED REVENUE GROWTH145.59%
Metric2027202820292030203120322033203420352036
Implied Revenue5,180.3912,722.6931,246.0876,738.26188,464.00462,854.891,136,740.432,791,757.896,856,369.2716,838,780.92
Constant Implied Growth145.59%145.59%145.59%145.59%145.59%145.59%145.59%145.59%145.59%145.59%
Implied Free Cash Flow0.521.273.127.6718.8546.29113.67279.18685.641,683.88
Discount Factor0.930.810.740.680.620.570.520.480.440.40
Present Value of Implied FCF0.481.032.315.2011.7226.3759.37133.64300.85677.25

Rolling Historical DCF (Backtest)

Valuation based on actual realized growth.
YearValuation DateActual PriceRealized Growth (5Y)Calculated Fair ValueValuation Delta
20192019-12-31$50.713.52%$-64.95-228.08%

Monte Carlo Simulation (1,000 Iterations)

Mean Fair Value
$-82.20
Median
$-81.69
10th Percentile
$-86.03
90th Percentile
$-78.96

Fair Value Distribution

$-97.66 - $-96.59
2
$-96.59 - $-95.52
0
$-95.52 - $-94.45
1
$-94.45 - $-93.38
0
$-93.38 - $-92.31
5
$-92.31 - $-91.24
3
$-91.24 - $-90.17
5
$-90.17 - $-89.10
9
$-89.10 - $-88.03
22
$-88.03 - $-86.96
23
$-86.96 - $-85.89
35
$-85.89 - $-84.82
50
$-84.82 - $-83.75
97
$-83.75 - $-82.68
121
$-82.68 - $-81.61
141
$-81.61 - $-80.54
153
$-80.54 - $-79.48
175
$-79.48 - $-78.41
98
$-78.41 - $-77.34
52
$-77.34 - $-76.27
8