{"id":20047,"date":"2023-09-18T23:56:00","date_gmt":"2023-09-18T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=20047"},"modified":"2025-05-16T09:24:39","modified_gmt":"2025-05-16T01:24:39","slug":"duke-energy","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/","title":{"rendered":"Duke Energy, representative of monopoly energy companies"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#Features_of_Duke_Energy\" >Features of Duke Energy<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#A_regulated_monopoly\" >A regulated monopoly<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#Power_Generation_Ratio_of_Various_Energy_Sources\" >Power Generation Ratio of Various Energy Sources<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#Market_capitalization_is_equal_to_companys_liabilities\" >Market capitalization is equal to company&#8217;s liabilities<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#Business_and_Capital_Indicators\" >Business and Capital Indicators<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#Revenue_and_Dividends\" >Revenue and Dividends<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#Competitive_Advantage\" >Competitive Advantage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#PE_and_Yield_Rate\" >P\/E and Yield Rate<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#The_role_of_regulation\" >The role of regulation<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#How_to_value\" >How to value?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#Determine_the_companys_profit_level\" >Determine the company&#8217;s profit level<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#Performance_is_easy_to_predict\" >Performance is easy to predict<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Features_of_Duke_Energy\"><\/span>Features of Duke Energy<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_regulated_monopoly\"><\/span>A regulated monopoly<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><a href=\"https:\/\/en.wikipedia.org\/wiki\/Duke_Energy\" target=\"_blank\" rel=\"noreferrer noopener\">Duke Energy<\/a> (NYSE: DUK ) is a regulated monopoly. For investors who may not be in North Carolina, who is Duke Energy, and what does a regulated monopoly position mean for investment?<\/p>\n\n\n\n<p>Duke Energy enjoys a legal monopoly from North Carolina. With very few exceptions, state law does not allow third-party vendors to sell electricity at all. For example, solar companies cannot directly sell their products because Duke Energy controls the distribution and transmission infrastructure. In exchange for the ability to control that market, the government steps in and regulates prices and regulates the amount of profit that a company like Duke Energy or another type of utility can generate. So they want to make sure Duke Energy doesn&#8217;t use that monopoly power to hurt consumers and charge exorbitant prices.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Power_Generation_Ratio_of_Various_Energy_Sources\"><\/span>Power Generation Ratio of Various Energy Sources<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Duke Energy, they are engaged in power generation business, coal, natural gas, nuclear power plants, 45% come from natural gas and fuel oil. Only 2% is currently used for hydro and renewable energy. One would think that over time the share of electricity generation from renewable sources should start to increase. But even nuclear power generation is actually only 35% of its business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Market_capitalization_is_equal_to_companys_liabilities\"><\/span>Market capitalization is equal to company&#8217;s liabilities<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>They are relatively diverse across the energy spectrum. The current market value of Duke Energy is about $76 billion, but coincidentally, Duke Energy is also saddled with $76 billion in debt. The company owes a lot of debt. The high debt is because building a utility generating facility is extremely expensive, with considerable costs involved. There is a constant need for companies to issue different types of bonds in order to continue to provide the business with sufficient funds for capital expenditure plans.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Business_and_Capital_Indicators\"><\/span>Business and Capital Indicators<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Revenue_and_Dividends\"><\/span>Revenue and Dividends<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>28 billion revenue, 4 billion operating income, 96 quarterly cash dividends, and the current yield is 4%. For those looking for a healthy dividend that increases over time, Duke Energy is really interesting, and it trades at a relatively low price-to-earnings ratio. We&#8217;re actually trading or only around 17 times, probably forward earnings, which isn&#8217;t necessarily unique in this industry, most utility energy companies trade around 17, 18, 19 times forward earnings. It&#8217;s not unique in this regard, but its multiple is relatively low compared to other more growth investments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Competitive_Advantage\"><\/span>Competitive Advantage<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>When we think about multiples, we think about other energy companies in this space. How competitive is Duke Energy? It has no competitors in North Carolina, but does it have competitors across the industry and other geographic areas?<\/p>\n\n\n\n<p>To an extent, but they do have a monopoly on their main business. When you look at valuations, you can&#8217;t really look at competitor valuations, which we typically do if we do a relative valuation analysis rather than an absolute valuation analysis.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"PE_and_Yield_Rate\"><\/span>P\/E and Yield Rate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>So in this case, it&#8217;s hard to do because there&#8217;s no competition, but you can look at similar companies across the country. Examples include other diversified energy businesses, other electric utilities, etc. These companies are currently trading at a median forward PE ratio of around 18, with Duke Energy currently trading at around 17, 17.5 times earnings. Duke Energy does have a 4% dividend yield. Many power companies also offer decent dividend yields, but not necessarily as high as 4%. But that&#8217;s not the real competitive advantage you see, it&#8217;s similar companies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_role_of_regulation\"><\/span>The role of regulation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_value\"><\/span>How to value?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Because this is the only power provider in North Carolina. Duke Energy operates in a truly highly regulated market. But does the North Carolina statute change how we evaluate it?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Determine_the_companys_profit_level\"><\/span>Determine the company&#8217;s profit level<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Yes, because it affects the company&#8217;s ability to grow profits. They often can&#8217;t grow profits the way growth companies or technology companies can. This has the advantage that since they are regulated, they are more predictable. Price increases are regulated, growth is regulated. When you look ahead, you get a better idea of how much a company like Duke Energy might make in the next three to five years.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Performance_is_easy_to_predict\"><\/span>Performance is easy to predict<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As with any company, there are supply and demand characteristics. The demand for energy ultimately affects the profits they generate. There is indeed some variability, but far more than the variability of an average company producing products and services dictates the prices the market will bear, hoping that supply and demand will work in their favour. Duke Energy is more regulated and therefore more predictable.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"119\" height=\"40\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2023\/05\/duk.jpg\" alt=\"Duke Energy\" class=\"wp-image-20050\"\/><figcaption class=\"wp-element-caption\">credit: Duke Energy<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/09\/18\/duke-energy\/\" target=\"_blank\" rel=\"noreferrer noopener\">Duke Energy, representative of monopoly energy companies<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/05\/15\/oligopoly-enterprise\/\">The world&#8217;s most well-known oligopoly companies<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/05\/27\/vistra-a-turned-around\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why did US largest electricity Vistra, a turned around company, share return higher than Nvidia?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/04\/14\/ge-spinoff\/\" target=\"_blank\" rel=\"noreferrer noopener\">How did three listed companies make money after GE spinoff? What are the prospects?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/12\/25\/hydrogen-energy\/\" target=\"_blank\" rel=\"noreferrer noopener\">Current progress of hydrogen energy and relevant companies<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/12\/18\/nuclear-energy\/\" target=\"_blank\" rel=\"noreferrer noopener\">Current developments in Nuclear Energy and related companies<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/01\/18\/nextera-energy\/\">How does Renewable Energy Giant NextEra Energy make money?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/29\/american-water-works\/\">How does American Water Works make money?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/13\/there-are-indeed-monopoly\/\">There are indeed monopoly in this world<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/03\/08\/monopolies-or-oligopolies\/\">How do monopolies or oligopolies work in the real world?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/02\/23\/industries-with-moat\/\">Industries with moat and going downhill<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/21\/how-should-investors-view-companies-being-included-in-the-antitrust-investigation-list\/\">Investors should not afraid of antitrust investigation on your holdings<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/08\/tech-antitrust-governance\/\">Antitrust and governance faced by Chinese and American technology giants<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Duke Energy is a regulated monopoly energy business<\/p>\n","protected":false},"author":1,"featured_media":20050,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[808,548,28,479],"tags":[976,824],"class_list":["post-20047","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","category-monopoly","category-us-stock-market","category-utility","tag-duk","tag-nee"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/20047","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=20047"}],"version-history":[{"count":11,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/20047\/revisions"}],"predecessor-version":[{"id":36345,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/20047\/revisions\/36345"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/20050"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=20047"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=20047"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=20047"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}