Is PNM Resources, Inc. overvalued or undervalued?

As of 30 June 2025, the valuation grade for PNM Resources, Inc. moved from fair to very expensive, indicating a significant shift in its perceived value. The company is currently considered overvalued based on its financial metrics. Key ratios include a P/E ratio of 23, an EV to EBITDA of 12.58, and a PEG ratio of 0.98, which suggest that the stock is trading at a premium compared to its earnings growth potential.
In comparison to its peers, PNM Resources, Inc. has a higher P/E ratio than Pinnacle West Capital Corp. at 24.26 and The AES Corp. at 25.28, both of which are also in the power industry. Additionally, its EV to EBITDA ratio is notably higher than OGE Energy Corp. at 10.71, reinforcing the notion that PNM is priced at a premium relative to its industry counterparts. Over the past year, PNM has outperformed the S&P 500 with a return of 31.72% compared to 17.14%, but its long-term performance has lagged significantly behind the index over three and five years.