TXNM Energy: Profit From Positive Demographics And Data Center Expansion

2025-04-11 14:53:01 ET

Summary

• TXNM Energy, Inc., formerly PNM Resources, serves 825,000 customers in Texas and New Mexico, with New Mexico being the larger market.
• The company plans to invest $7.8 billion in infrastructure, focusing on Texas due to rising electricity demand from data centers.
• The company's electric system load is increasing at a 13% CAGR in Texas, positioning it to double by the end of the decade.
• Despite high leverage and planned shareholder dilution, TXNM Energy projects 7%-9% earnings per share growth over the next five years.
• With a 3.26% current yield, TXNM Energy offers an 11%-12% potential total annual return, appealing for investors seeking safety and growth.

TXNM Energy, Inc. ( TXNM ) is a regulated electric utility that serves approximately 825,000 customers located throughout Texas and New Mexico:

The company that is currently known as TXNM Energy was formerly known as PNM Resources. Long-time readers might remember that we have discussed PNM Resources in various previous articles a few years ago. At the time, the management of PNM Resources was pushing hard for a merger with Iberdrola’s ( IBDSF ) Avangrid, which operates in the Mid-Atlantic and New England regions, but regulators were largely opposed to that deal. After much deliberation and back and forth with regulators, the deal was scuttled early last year. As such, it appears that a merger is no longer a possibility for this company, and investors should simply evaluate it as a standalone electric utility operating in New Mexico and Texas....

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