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TXNM Energy (TXNM)
NYSE:TXNM

TXNM Energy (TXNM) AI Stock Analysis

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TXNM Energy

(NYSE:TXNM)

Rating:58Neutral
Price Target:
$62.00
▲(10.09%Upside)
TXNM Energy's overall score reflects strong profitability growth and strategic investments, balanced by the challenges of high leverage and negative cash flow. Technical indicators show stability, while recent corporate events like the acquisition and rate approvals improve the outlook. Valuation remains fair, 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%.
Rate Case Settlement
The New Mexico rate case settlement signifies improving relations and smoother regulatory processes for TXNM.
Regulatory Success
TXNM's regulatory success is highlighted as a key driver of growth.
Negative Factors
Credit Pressures
Credit pressures likely remain with ESA costs in base rates, indicating potential financial challenges.
Equity Needs
Equity needs for the company increased to $1.3B in the 2025-29 period to support the $7.8B capex plan.
Wildfire Risk
Wildfire risk is acknowledged as an obstacle to achieving a higher valuation.

TXNM Energy (TXNM) vs. SPDR S&P 500 ETF (SPY)

TXNM Energy Business Overview & Revenue Model

Company DescriptionTXNM Energy (TXNM) is a prominent player in the energy sector, focusing on the exploration, production, and distribution of renewable energy resources. The company primarily operates within the solar and wind energy markets, providing sustainable energy solutions to both residential and commercial customers. TXNM Energy is committed to driving innovation and sustainability in the energy industry through its advanced technology and environmentally-friendly practices.
How the Company Makes MoneyTXNM 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 Earnings Call Summary

Earnings Call Date:May 09, 2025
(Q1-2025)
|
% Change Since: 6.93%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call highlighted TXNM Energy's steady financial performance and strategic investments in infrastructure, supported by favorable legislative changes in New Mexico. However, challenges such as lower transmission margins and the need for rate design adjustments in Texas were noted.
Q1-2025 Updates
Positive Updates
Ongoing Earnings and EPS Growth Target
TXNM Energy reported ongoing earnings for Q1 2025 at $0.19 per share, in line with expectations. The company reaffirmed its guidance for 2025 with an EPS range of $2.74 to $2.84 and maintained a long-term EPS growth target of 7% to 9%.
Rate Base Growth and Capital Investment
TNMP's rate base growth is supported by the approved system resiliency plan, allowing recovery of $546 million in capital improvements. TNMP plans to invest approximately $750 million in ERCOT's Permian Basin Reliability Study projects by 2030.
Legislative Success in New Mexico
New Mexico passed key bills, including site readiness bills and the creation of a wildfire task force, which aim to expedite infrastructure build-out and improve wildfire response.
Demand Growth in Texas
TNMP set a new system peak in Q1 2025, 22% higher than last year, with demand-based load increasing by 9.7%, driven by growth in North and West Texas regions.
Negative Updates
Lower Transmission Margins and Higher Costs
The quarter faced challenges with lower transmission margins, higher insurance premiums, and timing of plant outage costs impacting overall earnings.
Regulatory Challenges and Rate Design
TNMP's upcoming base rate case will focus on rate design and capital structure adjustments, addressing regulatory lag for the first time in seven years.
Company Guidance
During the TXNM Energy Q1 2025 conference call, the company affirmed its 2025 guidance range of $2.74 to $2.84 per share and maintained a long-term EPS growth target of 7% to 9%. Ongoing earnings for the first quarter were reported at $0.19, staying on track with expectations. The company highlighted its approved system resiliency plan, allowing a $546 million investment in capital improvements at TNMP. Additionally, TNMP experienced a 22% increase in system peak demand, with demand-based load growing by 9.7%. The company also discussed its five-year capital plan, projecting investments growing from $600 million in 2025 to over $1 billion by 2028. PNM's 2028 resource filing includes plans for 450 megawatts of resources, and New Mexico's legislative session saw the passage of site readiness bills and the creation of a wildfire task force.

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
75
Positive
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
68
Positive
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
60
Neutral
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.97B1.94B2.25B1.78B1.52B
Gross Profit1.29B1.05B1.11B991.09M937.79M
EBITDA929.21M634.58M682.44M663.84M639.95M
Net Income242.68M88.35M170.06M196.36M173.30M
Balance Sheet
Total Assets11.21B10.25B9.26B8.67B7.94B
Cash, Cash Equivalents and Short-Term Investments4.50M2.21M4.08M1.10M47.93M
Total Debt5.80B4.96B4.37B3.84B3.44B
Total Liabilities8.62B7.84B7.00B6.43B5.82B
Stockholders Equity2.55B2.36B2.20B2.18B2.06B
Cash Flow
Free Cash Flow-738.88M-524.64M-345.27M-387.14M-193.33M
Operating Cash Flow508.16M551.17M567.28M547.87M485.70M
Investing Cash Flow-1.17B-1.09B-950.35M-952.26M-733.80M
Financing Cash Flow684.35M537.10M386.04M357.56M292.19M

TXNM Energy Technical Analysis

Technical Analysis Sentiment
Positive
Last Price56.32
Price Trends
50DMA
55.34
Positive
100DMA
53.45
Positive
200DMA
49.49
Positive
Market Momentum
MACD
0.22
Positive
RSI
54.02
Neutral
STOCH
18.58
Positive
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 56.32 is below the 20-day moving average (MA) of 56.48, above the 50-day MA of 55.34, and above the 200-day MA of 49.49, indicating a neutral trend. The MACD of 0.22 indicates Positive momentum. The RSI at 54.02 is Neutral, neither overbought nor oversold. The STOCH value of 18.58 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TXNM.

TXNM Energy Risk Analysis

TXNM Energy disclosed 30 risk factors in its most recent earnings report. TXNM Energy reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

TXNM Energy Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
IDIDA
67
Neutral
$6.27B20.569.60%2.96%1.63%13.11%
IDIDA
67
Neutral
$6.27B20.569.60%2.96%1.63%13.11%
67
Neutral
$16.53B17.144.45%3.53%4.76%6.13%
63
Neutral
$1.75B17.885.84%3.14%-9.99%-73.66%
63
Neutral
$1.75B17.885.84%3.14%-9.99%-73.66%
POPOR
61
Neutral
$4.48B14.328.33%5.09%11.83%9.53%
POPOR
61
Neutral
$4.48B14.328.33%5.09%11.83%9.53%
58
Neutral
$5.22B25.058.37%2.89%10.10%149.78%
58
Neutral
$5.09B27.873.67%0.55%-12.73%-74.65%
58
Neutral
$5.09B27.873.67%0.55%-12.73%-74.65%
42
Neutral
$7.85B-20.99%-2747.57%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TXNM
TXNM Energy
56.32
21.11
59.95%
IDA
IdaCorp
116.35
26.87
30.03%
IDA
IdaCorp
116.35
26.87
30.03%
POR
Portland GE
40.91
0.21
0.52%
POR
Portland GE
40.91
0.21
0.52%
ENIC
Enel Chile SA
3.53
0.80
29.30%
ENIC
Enel Chile SA
3.53
0.80
29.30%
CEPU
Central Puerto SA
11.27
2.37
26.63%
CEPU
Central Puerto SA
11.27
2.37
26.63%
OKLO
Oklo Inc
55.94
48.26
628.39%

TXNM Energy Corporate Events

Private Placements and FinancingM&A Transactions
TXNM Energy Enters Stock Purchase Agreement with Zimmer
Neutral
Jun 24, 2025

On June 24, 2025, TXNM Energy entered into a Stock Purchase Agreement with Zimmer Partners and other purchasers to issue 3,615,003 shares of common stock for approximately $200 million. The proceeds will be used for general corporate purposes. The agreement includes provisions for voting on a merger with Troy ParentCo LLC, making TXNM a wholly-owned subsidiary of Blackstone Infrastructure Partners’ affiliate. The shares will be listed on the NYSE, and there are restrictions on their sale until August 15, 2025.

The most recent analyst rating on (TXNM) stock is a Hold with a $46.00 price target. To see the full list of analyst forecasts on TXNM Energy stock, see the TXNM Stock Forecast page.

Private Placements and FinancingFinancial Disclosures
TXNM Energy Completes Bond Prepayment Offer
Neutral
Jun 20, 2025

On June 14, 2025, Texas-New Mexico Power Company (TNMP) concluded its offer to prepay $1,505,000,000 in First Mortgage Bonds, which was initially announced on May 19, 2025. The offer resulted in $1,084,300,000 worth of bonds being validly tendered and accepted for purchase, with holders receiving the full principal amount plus accrued interest, impacting TNMP’s financial operations by reducing its outstanding bond liabilities.

The most recent analyst rating on (TXNM) stock is a Hold with a $45.00 price target. To see the full list of analyst forecasts on TXNM Energy stock, see the TXNM Stock Forecast page.

Private Placements and FinancingM&A TransactionsBusiness Operations and Strategy
TXNM Energy Amends Credit Agreements Amid Merger Waivers
Neutral
May 27, 2025

On May 23, 2025, TXNM Energy, Inc. made significant amendments to its credit agreements, including its $300 million revolving credit agreement and $500 million term loan agreement, to redefine ‘Change of Control’ and waive defaults related to its merger agreement with Troy ParentCo LLC. Additionally, Texas-New Mexico Power Company amended its $200 million revolving credit agreement to prevent a Bond Repurchase Event for its $1.505 billion First Mortgage Bonds. The termination of TXNM’s $910 million Merger Backstop Revolving Facility followed these amendments, as the necessary waivers were obtained.

The most recent analyst rating on (TXNM) stock is a Hold with a $45.00 price target. To see the full list of analyst forecasts on TXNM Energy stock, see the TXNM Stock Forecast page.

M&A TransactionsBusiness Operations and Strategy
TXNM Energy to be Acquired by Blackstone Infrastructure
Positive
May 19, 2025

On May 18, 2025, TXNM Energy announced an agreement to be acquired by Blackstone Infrastructure for $61.25 per share, valuing the company at $11.5 billion. The merger, expected to close in the second half of 2026, aims to provide long-term capital to support TXNM’s growth in New Mexico and Texas. TXNM will remain locally managed, with commitments to retain its workforce and honor union agreements. The transaction has been unanimously approved by TXNM’s board and awaits regulatory approvals. The acquisition is expected to enhance TXNM’s infrastructure investments and align with its long-term financing strategy, benefiting stakeholders and supporting economic development in the region.

The most recent analyst rating on (TXNM) stock is a Hold with a $45.00 price target. To see the full list of analyst forecasts on TXNM Energy stock, see the TXNM Stock Forecast page.

Business Operations and StrategyRegulatory Filings and Compliance
TXNM Energy Gains Approval for Rate Increases
Positive
May 15, 2025

On May 15, 2025, the New Mexico Public Regulation Commission approved PNM’s 2025 Rate Request application, allowing a $105 million increase in revenue requirements to be phased in starting July 1, 2025, with a completion date of April 1, 2026. Additionally, TNMP received approval from the Public Utility Commission of Texas for a $25 million annual rate increase to recover distribution costs, effective approximately 45 days after approval. These regulatory approvals are significant for TXNM Energy‘s operations, impacting its financial structure and market positioning.

The most recent analyst rating on (TXNM) stock is a Hold with a $45.00 price target. To see the full list of analyst forecasts on TXNM Energy stock, see the TXNM Stock Forecast page.

Executive/Board ChangesShareholder Meetings
TXNM Energy Announces Leadership Transition and Shareholder Meeting
Neutral
May 14, 2025

On May 13, 2025, TXNM Energy‘s Board of Directors announced a leadership transition, effective July 1, 2025, with Patricia K. Collawn moving to Executive Chairman and Joseph D. Tarry assuming the roles of Chief Executive Officer and President. This transition is part of a long-standing succession plan, with Collawn having significantly advanced TXNM’s focus on regulated utilities and clean energy goals, achieving 72% carbon-free generation capacity by 2024. Additionally, TXNM held its Annual Meeting of Shareholders on May 13, 2025, where several directors were elected for a one-year term, KPMG LLP was ratified as independent public accountants, and the compensation of TXNM’s NEOs was approved.

The most recent analyst rating on (TXNM) stock is a Hold with a $42.00 price target. To see the full list of analyst forecasts on TXNM Energy stock, see the TXNM Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: May 20, 2025