D — Dominion Energy, Inc.

Dominion beat and reaffirmed in Q2 2026 - operating EPS of $0.79 vs. $0.68 consensus, revenue +17.6% YoY to $4.48B, full-year guidance of $3.45-$3.69 repeated and the 5-7% long-term growth target extended to 2030 - yet the stock fell 5.41% over the month into 2026-09-13 and 2.25% in the final week. The tape is trading the cost and regulatory side of the story, not the demand side: operating expenses jumped 53% YoY, the CVOW price tag was revised up ~2% to $11.65B, Virginia Governor Spanberger formally intervened in the NextEra merger review on 2026-08-06, and Morgan Stanley cut its target to $68 on 2026-08-21 (TD Cowen went the other way on 2026-08-19, upgrading to Buy with an $80 target). Consensus is Hold with a $71.56 average target across six analysts - roughly 11% above the 2026-09-13 price - so the sell-side sees upside the tape has so far refused to pay for.

Two trends, pointing in opposite directions. Revenue is genuinely accelerating: $3.81B in Q3 2023 to $4.56B in Q2 2026, with YoY growth stepping from ~11% in mid-2025 to +26.2% in Q1 2026 and +19.6% in Q2 2026, driven by Virginia rate increases, data center load, and pass-through fuel/wholesale costs. Margins are compressing at the same time: operating margin fell YoY for four straight quarters (Q2 2026 at 23.5% vs. 28.8% in Q2 2025, -530bp; Q4 2025 18.5% vs. 22.7%; Q1 2026 28.0% vs. 30.0%; Q3 2025 29.6% vs. 30.9%), and Q2 2026 operating income of $1,070M was actually below the $1,096M of a year earlier despite 19.6% more revenue. GAAP net income fell to $340M from $760M and diluted EPS to $0.37 from $0.88 - but $0.79 of operating EPS vs. $0.68 consensus shows a large part of that gap is one-off/merger-related charges rather than run-rate decay. Cash quality is fine (TTM operating cash flow of $5.39B, +17% YoY, accruals ratio a healthy -1.01%); the problem is that TTM capex of $12.2B leaves free cash flow at -$6.8B and long-term debt has climbed from $33.1B in Q3 2023 to $46.7B in Q2 2026. This is not a structural decline - it is a regulated utility in a heavy, rate-base-funded investment cycle - but the revenue acceleration has so far failed to translate into per-share earnings growth.

Fair, leaning slightly expensive on growth-adjusted terms. As of 2026-09-13: price $64.52, TTM P/E 22.3x versus a five-year average of 23.9x, P/S 3.10x versus a 3.59x five-year average, P/B 1.96x, dividend yield 4.06%. On next-FY consensus EPS of $3.587 the forward P/E is 18.0x - cheaper than its own history - but a PEG of 2.26 on trailing numbers (and roughly 2.6-3.0x on a 6% growth rate) says you are paying full price for mid-single-digit growth. ROIC of 3.4% against a 10.3% ROE and 1.85x debt/equity tells you those earnings are levered rather than high-return. The 4.06% yield is doing the real work in the valuation; the multiple is not.

The GAAP-versus-operating earnings gap is the whole game. TTM GAAP EPS of $2.90 covers the $2.62 annualized dividend only about 1.1x (~90% payout), while the 2026 operating guidance midpoint of $3.57 covers it roughly 1.37x. At $64.52 on 2026-09-13 the market is paying ~18x operating earnings and ~22x GAAP, meaning it is treating the Q2 2026 $0.37 GAAP print as a charge-distorted blip rather than a new run rate. Two ways to be wrong: if the opex, PJM wholesale, and interest-cost pressure are structural, GAAP EPS stays near $3.00 and the stock is expensive with a stretched payout; if CVOW and the new gas generation come online on schedule and Virginia rate base keeps compounding, operating EPS grinds 5-7% and the shares re-rate toward the low $70s. Note also that consensus next-FY revenue of $18.29B is essentially flat versus TTM revenue of ~$18.3B - nobody is underwriting another +20% revenue year.

As of 2026-09-13, RSI(14) was 32.16 - approaching oversold but not there, and with no positive divergence. The $64.52 price sat 3.42% below the 20-day SMA (~$66.8), 6.00% below the 50-day (~$68.6), and only 0.25% above the 200-day (~$64.4), making the 200-day the decisive line. The stock is down 5.41% over one month and 5.23% over three, but up 1.82% over six - a sharp pullback inside a longer sideways-to-up drift, parked mid-range in the $55.85-$72.99 52-week band. This is a wait-for-either-capitulation-or-confirmation setup: a close below the 200-day with RSI into the mid-20s would offer a better entry, while reclaiming the 50-day (roughly $68.6) would signal the pullback is over. Buying mid-range with a soft trend and no catalyst until the 2026-10-30 print has no edge.

• Interest rates and the 10-year Treasury: with $46.7B of long-term debt, 1.85x debt/equity, and a current ratio of 0.81, Dominion is acutely exposed to refinancing costs; the 0.62 beta insulates the equity only partially, and rate-cut expectations have been a meaningful part of the utility bid.
• Data center / AI electricity demand in Northern Virginia's 'Data Center Alley': 53.8 GW of contracted data center capacity as of July 2026 (5.3 GW added in H1 2026 alone) and nine of the top ten all-time peak load days occurring in 2026. A genuine structural tailwind, but one that forces ever-larger capex and equity/debt issuance.
• Wholesale PJM power price volatility: Dominion Electric Virginia procures roughly 23% of its energy from the wholesale PJM market, up from 14% in 2021, exposing earnings to power price swings until company-owned generation (CVOW, new gas peaking/combined cycle) is in service.
• Regulatory and political environment: constructive outcomes like the unanimous South Carolina PSC electric rate settlement in June 2026 sit alongside Virginia Governor Spanberger's 2026-08-06 intervention in the NextEra merger review - affordability politics are cutting against large utility combinations.
• Sector rotation and the defensive/AI-power thematic: utilities have been bid as an AI-adjacent play, which cuts both ways - it supports multiples but leaves the sector vulnerable to rotation-driven drawdowns when rate expectations shift.
• Capital markets dependence: with negative free cash flow, the dividend and capex are funded externally, so equity issuance is dilutive to per-share growth and credit rating pressure is a live constraint.

• Q3 2026 earnings on 2026-10-30: updates on data center hookup pacing, winter load forecasts, operating expense containment, and confirmation of $3.45-$3.69 full-year operating EPS guidance.
• NextEra Energy combination milestones: the shareholder vote in early September 2026, Virginia SCC and South Carolina regulatory filings, FERC review, and the outcome of Governor Spanberger's intervention (positive if cleared with conditions, sharply negative if the deal breaks).
• Coastal Virginia Offshore Wind (CVOW) progress: the $11.65B cost estimate with $123M of unused contingency, and the in-service timeline that determines when bought wholesale power is replaced by owned generation.
• Further data center contracting beyond the 53.8 GW already signed, plus associated Virginia rate base growth and rate case outcomes.
• Federal Reserve rate cuts, which would lower the discount rate applied to utility cash flows and ease refinancing costs on the debt stack.
• Dividend policy and payout trajectory: whether a higher payout is maintained through the capex cycle or growth slows.

• Balance sheet and funding: $46.7B long-term debt (up ~41% since Q3 2023), 1.85x debt/equity, 1.62x long-term debt/equity, a 0.81 current ratio, and only $296M of cash against -$6.8B of TTM free cash flow - the dividend and capex depend on continuous access to capital markets.
• Operating cost and wholesale pressure: operating expenses up 53% YoY, operating margin down 530bp YoY in Q2 2026, and 23% PJM wholesale procurement. If this is structural rather than transitional, the 5-7% EPS growth target is at risk.
• Dividend coverage: TTM GAAP EPS of $2.90 against a $2.62 dividend is a ~90% payout; if one-off charges keep recurring, dividend growth stalls and the 4.06% yield stops being a total-return driver.
• Regulatory and political risk: the Virginia Governor's intervention in the NextEra review plus general affordability politics; an adverse rate case or a broken deal would remove the premium and the acquisition-related upgrade thesis at once.
• Interest expense: a growing debt load in a higher-for-longer rate environment directly compresses earned ROE and drives the gap between revenue growth and EPS growth.
• Execution risk on CVOW and the new gas generation build - offshore wind schedules have a poor industry-wide track record, and the cost estimate has already been revised up once.

Direct read: a hold, not a buy, at $64.52 on 2026-09-13. The demand story is the best in the domestic utility space (53.8 GW of contracted data center capacity, nine of the top ten peak-load days ever recorded in 2026) and the 4.06% dividend is reasonably covered on operating earnings. But this equity is a leveraged bet on regulated rate base: ROIC is 3.4%, free cash flow was -$6.8B TTM, long-term debt is up 41% in three years, and the GAAP payout is ~90%. Paying ~18x forward operating EPS and ~22x GAAP for 5-7% growth is a fair-to-full price, and the pending NextEra combination means the shares will trade on regulatory politics as much as fundamentals. I would want the low $60s, or hard evidence that opex and PJM wholesale costs are peaking, before adding.

Two-method blend as of 2026-09-13: 60% weight on 18.5x next-FY consensus operating EPS of $3.587 = $66.42 (a multiple set between the current 18.0x forward and the 23.9x five-year average trailing P/E, justified by confirmed 5-7% EPS growth guidance and a 4.06% yield, but discounted for 1.85x debt/equity and negative free cash flow), plus 40% weight on the dividend anchor of $2.616 annualized divided by a 4.00% required yield = $65.40. Blended result $66.05, about 2% above the $64.52 price on 2026-09-13 and below the $71.56 sell-side consensus, reflecting that the data center growth is real but funded externally rather than from internally generated cash.