utility company has a base load that has been stable for a decade, though the population it serves has grown. (Energy efficiency trends have been offset by population growth.) Analysts expect that the utility will become more profitable as it adds more renewable generation to its mix. Analysts believe the company's dividend growth rate will be 3% going forward since It has recently replaced its aging coal-fired plant with solar + battery. It paid a $3.00 annual dividend last year. Comparable investments return 7%.
A utility company has a base load that has been stable for a decade, though the population it serves has grown. (Energy efficiency trends have been offset by population growth.) Analysts expect that the utility will become more profitable as it adds more renewable generation to its mix. Analysts believe the company's
a. What is the intrinsic price of this stock?
b. Another analyst believes that, despite the changing mix of energy generation, the utility company will not increase its cash flow or earnings. This analyst has calculated the intrinsic value based on no growth? How much does she believe the utility company is worth/share?
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