Public Service Enterprise Group Incorporated (PEG) Intrinsic Value & DCF Valuation
Regulated Electric · NYSE
Current Price
$72.82
Intrinsic Value
$82.49
+11.7% margin of safety
What Is Public Service Enterprise Group Incorporated's Intrinsic Value?
As of 2026-10-27, the base-case DCF model estimates the intrinsic value of Public Service Enterprise Group Incorporated (PEG) at $82.49 per share, compared with a market price of $72.82, a margin of safety of +11.7%. The base case assumes 7.2% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $66.18 to $101.26. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Public Service Enterprise Group Incorporated (PEG) Undervalued?
At $72.82, PEG trades about 11.7% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Regulated Monopoly Infrastructure
PSEG operates essential electric and gas infrastructure within defined service territories. This regulatory framework grants it a de facto monopoly, preventing direct competition for basic utility services.
↑High Capital Intensity
The immense cost and time required to build new utility infrastructure create a significant barrier to entry. Existing assets represent a substantial sunk cost that new entrants cannot easily replicate.
↑Essential Service Demand
Electricity and gas are non-discretionary services critical for modern life. PSEG benefits from stable, inelastic demand, ensuring a consistent revenue stream regardless of economic cycles.
INVESTMENT RISKS
↓Extreme Weather Events
Severe weather can disrupt operations, damage infrastructure, and lead to significant repair costs. These events can also result in reputational damage if service restoration is slow.
↓Cybersecurity Threats
As a critical infrastructure provider, PSEG is a target for cyberattacks. A successful breach could disrupt services, compromise sensitive data, and incur substantial remediation expenses.
↓Interest Rate Sensitivity
Utilities are capital-intensive and often carry significant debt. Rising interest rates increase borrowing costs, impacting profitability and the affordability of new projects.
Base case
PEG base case valuation
Intrinsic Value
$82.49
Margin of safety
+11.7%
Expected annual return
+2.5%
Base case assumptions: 7.2% annual growth, 10.0% discount rate, 18.28x exit multiple, 5 year projection. Data as of 2026-10-27.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the PEG valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Public Service Enterprise Group Incorporated respond.
Open DCF Calculator for PEGCompany Overview
Public Service Enterprise Group Incorporated (PSEG) is an energy provider primarily operating through its subsidiaries in the Northeastern and Mid-Atlantic United States. The company's business activities are structured into two primary segments: PSE&G and PSEG Power. The PSE&G division is responsible for transmitting electricity and distributing both electricity and natural gas to residential, commercial, and industrial customers. This segment also commits resources to solar power generation projects and various energy efficiency initiatives, as well as offering appliance service and repair. By December 31, 2021, its substantial infrastructure included 25,000 circuit miles of electric transmission and distribution systems, supported by 862,000 utility poles. It also featured 56 switching stations with a total capacity of 39,353 megavolt-amperes (MVA) and 235 substations with a combined capacity of 9,285 MVA. The electric network was further managed by four main and five sub-electric distribution headquarters. On the gas side, PSE&G maintained 18,000 miles of gas mains, twelve primary and two secondary gas distribution headquarters, a single meter shop, and 58 natural gas metering and regulating stations. Public Service Enterprise Group Incorporated was established in 1985 and is headquartered in Newark, New Jersey.
Financial Metrics — PEG Stock Valuation Data
Revenue/Share (TTM)
$25.14
FCF/Share (TTM)
$3.98
ROIC (TTM)
4.6%
ROE (TTM)
11.7%
P/FCF
18.3x
EV/EBITDA
13.5x
FCF Yield
5.47%
Debt/Equity
1.42x
Based on trailing twelve-month data, PEG shows a free cash flow per share of $3.98 and a ROIC of 4.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 18.3x and FCF yield of 5.47% are important context metrics when evaluating PEG's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of PEG?
Public Service Enterprise Group Incorporated currently generates $3.98 in free cash flow per share. At the current price of $72.82, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is PEG undervalued?
PEG trades at a P/FCF ratio of 18.3x with a free cash flow yield of 5.47%. This P/FCF is in a moderate range. However, whether PEG is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value PEG stock using DCF?
To perform a DCF valuation on Public Service Enterprise Group Incorporated: (1) Start with the trailing free cash flow per share ($3.98) as the base, (2) project future FCF growth over 5-10 years based on Regulated Electric industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting PEG's risk profile — with a debt-to-equity of 1.42x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to PEG?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Public Service Enterprise Group Incorporated, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Regulated Electric trends, then discounting those amounts to today's dollars. PEG's ROIC of 4.6% means the company's return on invested capital sits below the level that typically clears its cost of capital.
How does WACC affect PEG stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For PEG, with a debt-to-equity ratio of 1.42x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 13.5x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See PEG PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Utilities valuationsDCF and P/E value PEG with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-10-27. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.