Is PNM Resources, Inc. overvalued or undervalued?

As of 9 May 2025, PNM Resources, Inc. has moved from a fair valuation to very expensive, indicating a significant shift in its market perception. The company is currently considered overvalued, with a P/E ratio of 23, which is higher than the industry average represented by IDACORP, Inc. at 20.31. Additionally, PNM's EV to EBITDA stands at 12.58, while its peer, Portland General Electric Co., has a lower ratio of 10.45, further highlighting the premium at which PNM is trading.
In terms of return on equity (ROE), PNM Resources reports 8.94%, which is relatively modest compared to the higher valuations of its peers. The PEG ratio of 0.98 suggests that while the growth expectations may be reasonable, the current price does not justify the valuation given the company's performance metrics. Notably, PNM's stock has outperformed the S&P 500 over the past year, returning 56.09% compared to the index's 10.26%, but this strong performance does not mitigate the concerns regarding its current valuation.