TXNM Energy (TXNM) AI Stock Analysis

• Market Cap: $4.91B
• Dividend Yield: 3%
• Average Volume (3M): 954.13K
• Price to Earnings (P/E): 23.6
• Beta (1Y): 0.19
• Revenue Growth: 10.10%
• EPS Growth: 149.78%
• Country: US
• Employees: 1,695
• Sector: Utilities
• Sector Strength: 82
• Industry: Regulated Electric
• EPS (TTM): 0.19
• Shares Outstanding: 92,659,330
• 10 Day Avg. Volume: 811,119
• 30 Day Avg. Volume: 954,135
• PEG Ratio: 0.53
• Price to Book (P/B): 1.93
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -6.72
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $56.83
• Price Target Upside: 6.82% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

TXNM Energy's overall stock score is supported by its strong profitability growth and strategic investments, as indicated by its financial performance and positive earnings call. However, high leverage and cash flow challenges are notable risks. The stock's fair valuation and stable technical indicators offer additional support, presenting a balanced investment opportunity with moderate risks and potential for long-term growth.

Positive Factors

Earnings Growth

The growth outlook is solid with a bullish EPS growth expectation of 7-9%.

Investment Opportunities

Upside to the plan includes additional transmission and generation capex opportunities in both TX and NM.

Regulatory Developments

The New Mexico rate case settlement signifies improving relations and smoother regulatory processes for TXNM.

Negative Factors

Financial Constraints

The balance sheet is somewhat constrained with weak credit metrics, requiring equity-like debt securities and common equity issuances to support the growth plan.

Parent Company Impact

The parent company remains an increasing drag on the sum-of-the-parts valuation.

Risk Management

Wildfire risk is acknowledged as an obstacle to achieving a higher valuation.

TXNM Energy Business Overview & Revenue Model

Company Description

TXNM Energy, Inc., through its subsidiaries, provides electricity and electric services in the United States. It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments. The PNM segment engages in the generation, transmission, and distribution of electricity. The segment owns and leases communications, office and other equipment, office space, vehicles, and real estate. It generates electricity using coal, natural gas and oil, and nuclear fuel and waste, as well as solar, wind, geothermal, and battery storage energy sources. The TNMP segment provides regulated transmission and distribution services. The segment also owns and leases vehicles, service facilities, and office locations throughout its service territory. The company serves residential, commercial, and industrial customers and end-users of electricity in New Mexico and Texas. The company was formerly known as PNM Resources, Inc and changed its name to TXNM Energy, Inc. in August 2024. TXNM Energy, Inc. was founded in 1882 and is based in Albuquerque, New Mexico.

How the Company Makes Money

TXNM Energy generates revenue through multiple streams, primarily from the sale of electricity generated by its solar and wind farms. The company enters into power purchase agreements (PPAs) with utilities and large organizations, ensuring a steady flow of income over long-term contracts. Additionally, TXNM Energy offers installation and maintenance services for solar panels and wind turbines, providing an additional revenue stream. Strategic partnerships with technology firms and government incentives for renewable energy projects also contribute to the company's financial success.

TXNM Energy Financial Statement Overview

Summary

TXNM Energy demonstrates strong profitability improvements, evidenced by enhanced margins and return on equity. However, high leverage poses a risk, and consistent negative free cash flow signals ongoing cash management challenges. The company needs to focus on strengthening its balance sheet and improving cash flow sustainability.

Income Statement

TXNM Energy shows a strong gross profit margin, improving from 53.9% in 2023 to 65.6% in 2024. The net profit margin increased significantly from 4.6% to 12.3%, indicating enhanced profitability. Revenue growth was modest at 1.65% from 2023 to 2024, following a decline in prior years. EBIT and EBITDA margins improved, reflecting operational efficiency gains.

Balance Sheet

The debt-to-equity ratio remains high at 2.28 in 2024, indicating considerable leverage. However, the return on equity improved to 9.5%, suggesting better utilization of equity. The equity ratio stands at 22.7%, reflecting a moderate level of financial stability, though leverage remains a concern.

Cash Flow

Free cash flow remains negative, although the operating cash flow to net income ratio is strong at 2.09. The free cash flow to net income ratio is negative, highlighting cash flow challenges despite operational improvements.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.97B	1.94B	2.25B	1.78B	1.52B
	Gross Profit
1.29B	1.05B	1.11B	991.09M	937.79M
	EBIT
453.49M	231.34M	393.76M	308.15M	285.28M
	EBITDA
931.32M	634.58M	682.44M	663.84M	639.95M
	Net Income Common Stockholders
242.68M	88.35M	170.06M	196.36M	173.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.50M	2.21M	4.08M	1.10M	47.93M
	Total Assets
11.21B	10.25B	9.26B	8.67B	7.94B
	Total Debt
5.80B	4.96B	4.37B	3.84B	3.44B
	Net Debt
5.80B	4.96B	4.37B	3.84B	3.39B
	Total Liabilities
8.62B	7.84B	7.00B	6.43B	5.82B
	Stockholders Equity
2.55B	2.36B	2.20B	2.18B	2.06B
Cash Flow		Free Cash Flow
-738.88M	-524.64M	-345.27M	-387.14M	-193.33M
	Operating Cash Flow
508.16M	551.17M	567.28M	547.87M	485.70M
	Investing Cash Flow
-1.17B	-1.09B	-950.35M	-952.26M	-733.80M
	Financing Cash Flow
684.35M	537.10M	386.04M	357.56M	292.19M

TXNM Energy Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 53.20
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TXNM, the sentiment is Positive. The current price of 53.2 is above the 20-day moving average (MA) of 52.88, above the 50-day MA of 52.16, and above the 200-day MA of 46.57, indicating a bullish trend. The MACD of 0.28 indicates Positive momentum. The RSI at 54.42 is Neutral, neither overbought nor oversold. The STOCH value of 40.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TXNM.

TXNM Energy Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
POR	73 Outperform	$4.67B	14.91	8.33%	4.69%	11.83%	9.53%
TXNM	70 Outperform	$4.91B	23.57	8.37%	3.00%	10.10%	149.78%
IDA	70 Neutral	$6.06B	19.89	9.60%	3.01%	1.63%	13.11%
ENIC	68 Neutral	$5.44B	30.17	3.67%	5.67%	-12.73%	-74.65%
CEPU	68 Neutral	$1.91B	34.29	3.52%	2.86%	-14.28%	-85.93%
Sector *	63 Neutral	$8.43B	10.33	5.35%	4.38%	3.61%	-11.54%
OKLO	42 Neutral	$4.02B	―	-17.61%	―	―	-2747.57%

TXNM Energy Corporate Events

TXNM Energy Approves 2025 Executive Incentive Plans

On February 24, 2025, TXNM Energy’s Board of Directors approved new compensatory arrangements for its executive officers, including the 2025 Officer Annual Incentive Plan and the 2025 Long-Term Incentive Plan. The Annual Incentive Plan, covering the year 2025, offers cash bonuses based on achieving specific earnings per share and other goals, with payouts contingent on meeting a minimum earnings threshold. The Long-Term Incentive Plan spans three years and includes performance share awards and time-vested restricted stock rights, with awards contingent on meeting earnings growth, relative TSR, and FFO/Debt Ratio goals. Amendments to previous plans were also approved to exclude extraordinary events from performance calculations.