USD/BTC = $75,814
Block 974,944

Today's Stock: Portland General Electric Company (POR)

Portland General Electric is a regulated electric utility serving Portland and the northern Willamette Valley in Oregon. It generates, buys, transmits and distributes power to homes and businesses.

My Thoughts 💭

One share costs 60,609 sats ($45.95). It pays $2.205 a year in dividends, 2,908 sats a share, so it would take about 21 years of dividends to break even on one share at that price. The P/E is 20.0, a 20 year payback on earnings. There is no payback at all on free cash flow because free cash flow is negative. Let's review the fundamentals to determine if this stock is worth spending sats on.

PE:

P/E 20.0 TTM on earnings of $273M. Simply Wall St calls it good value against the peer average of 22.2 and against its fair P/E of 20.8, but expensive against the electric utilities industry average of 19.5. The price sits right on my rule 3 line of under 20, not below it.

Expected Growth:

Earnings are forecast to grow 14.35 percent a year and revenue 7.4 percent a year. EPS is expected to grow 39 percent over the next 3 years against 19 percent for the industry. Forecast ROE rises to 9.3 percent from 6.3 percent today. Add the 4.8 percent dividend yield to the growth and the projected total return is about 19 percent a year. That clears my 15 percent Bitcoin bear hurdle but not the 30 percent bull hurdle.

Revenues and expenses:

Revenue $3.55B TTM with net income of $273M, a 7.68 percent net margin. Cash from operations is $959M a year, but free cash flow is negative $416M a year and Simply Wall St calls the trend alarming. Rule 5 fails. A utility pouring cash into the grid still has to show positive free cash flow sooner or later.

Balance Sheet:

Total debt $5.43B against cash and short term investments of just $69M. Debt to equity is 125.4 percent and interest is covered only 2.1 times by earnings. Normal leverage for a utility, but rules 1 and 4 fail outright on my sheet.

Dividend:

Yield 4.8 percent on $2.205 a share a year, which passes rule 2 with room. The payout ratio is 90 percent of earnings though, so rule 6 fails, and Simply Wall St says the dividend is not well covered by earnings or free cash flows. The next payment is $0.55 a share, ex date December 22, 2026, pay date January 15, 2027. Share count is also rising, a buyback yield of negative 6.5 percent, which dilutes the holder while the dividend goes out the door.

Bitcoin per share:

None. POR holds no BTC on its balance sheet.

Ownership breakdown:

Institutions hold 99.5 percent, insiders 0.435 percent. The top 25 shareholders own about 71 percent, with BlackRock the largest at 15.7 percent.

Leadership:

CEO Maria Pope has run the company since October 2017. Her total compensation is $7.58M, below the $8.42M average for companies of similar size, and Simply Wall St flags no excessive pay concern. Rule 7 passes.

Blok's 9 rules: 3 of 9

1. ❌ Debt $5.43B with a debt to equity ratio of 125.4 percent
2. ✅ Dividend yield 4.8 percent
3. ⚠️ P/E 20.0 sits right on the line, not under 20
4. ❌ Cash $69M against debt of $5.43B
5. ❌ Free cash flow is negative $416M
6. ❌ Payout ratio 90 percent
7. ✅ CEO pay $7.58M is below the similar size average of $8.42M
8. ✅ Energy, a regulated electric utility
9. ⚠️ Projected return near 19 percent clears the 15 percent bear hurdle only

Lyn's Lens:

The first pillar passes at the door. POR is a profitable company with hard regulated assets and real earnings. Her entry math for mid teens growth plus a near 5 percent yield supports roughly 25x to 30x earnings, and on trailing EPS of $2.29 that implies about $57 to $69. The $45.95 price works on earnings with room to spare. Cash is where her lens turns. Free cash flow is negative, the dividend is not covered by it, and the balance sheet carries real leverage. Lyn's Lens says the price works on earnings, not on cash flow.

Closing take

While I am a fan of investing in utilities I think buying and holding 60k worth of sats should perform better than this utility company. The high leverage and low FCF makes me think this is a dead but essential company. Investors won’t get rich holding this but it will take a long grind to get the initial investment back while inflation will continue to erode the value of the dollar. This is a pass for me!

Price context: $45.95 sits near the low end of its range between $43.26 and $54.62 over the past year, down about 4 percent in that year. Simply Wall St puts its cash flow value at $46.60 and the analyst consensus target at $52.27.