We initiate on D with a Strong Buy and $89 PT. Dominion Energy, Inc. provides regulated electric and natural gas service to 6M+ customers in the Mid-Atlantic & Southeast, with one of the broadest regulated asset footprints in the US. The gap between perception & reality is our opportunity.
The market has discounted D's earnings power under macro uncertainty and lingering skepticism on its capital efficiency returns. But three secular tailwinds create a unique positioning: hyperscale data center demand pull, a regulatory regime aligned for base-rate expansion, and a $50bn capex cycle that is largely rider-recoverable and politically insulated.
Consensus implies EBITDA to grind upward at a mid-single digit pace, but hyperscale development across NoVA tilts the curve sharply upward; our models show 14.5% in FY25E and 12.2% in FY26E driven by contracted loads already on the books and sustained volume pressure from electrification.
We capture this via a forward EV/EBITDA multiple at 13.5x FY26E, which is a sensible blend between peer comps and Dominion's distinctively resilient cash flows. Even accounting for multiple compression risk from higher for longer rates and regulatory debate over cost-recovery, incremental contributions from CVOW build and renewable gas credits cement a floor for D's mid-term profile.
Risk to headlines is regulatory pushback from state commissions or tighter Fed liquidity, but recent approvals and the tariff structure suggest the base is primed for growth demands. R/R bias is decisively positive: data and decarb demand is not cyclical noise but the catalyst for above-peer returns in a defensive sector.