DUK Stock Underperforms Industry in 6 Months: Here's How to Play

Duke Energy DUK shares have gained 5.7% over the past six months compared with the Zacks Utility-Electric Power industry’s growth of 11.9%. The company is benefiting from its growing renewable business and strategic investment plans. 
 

Shares of other operators in the same industry, NextEra Energy NEE and The Southern Company SO, have gained 23% and 1.3%, respectively, during the aforementioned period. NextEra Energy benefits from its strategic investments and expansion of renewable portfolio. Southern Company's five-year capital plan includes investments in new generation and grid modernization to support load growth. SO’s focus on regulated assets reduces merchant risk and provides a transparent pathway for earnings growth. 

Given the current underperformance in price, should you consider including Duke Energy in your portfolio? Let's examine the factors in detail and assess the investment prospects.

Factors Driving the Performance of DUK Stock

Duke Energy is gaining momentum through its broad energy mix, ongoing investments in modern technology and infrastructure. By combining renewable resources such as solar and wind with conventional sources like nuclear, coal and natural gas, the company ensures reliable service for its customers.

DUK is rapidly advancing its clean-energy transition by planning to cut coal generation to under 5% by 2030 and fully eliminate coal by 2035, supported by retiring 58 coal units totaling 8,000 megawatt (MW). The company has also committed to net-zero methane emissions by 2030 and net-zero carbon emissions by 2050. To support this shift, it aims to add more than 7,500 MW of new, lower-emission natural-gas generation by 2030.

Duke Energy is currently focused on expanding its scale of operations, implementing modern technologies at its facilities as well as enhancing its renewable generation portfolio by investing heavily in infrastructure and expansion projects. To meet customer needs, the company currently anticipates spending capital worth $190-$200 billion over the next decade, a major portion of which will go to the clean energy transition.

DUK is pushing forward with plans to expand its nuclear portfolio as a key component of its long-term clean energy vision, especially in the Carolinas. In January 2025, the company partnered with GE Hitachi to support updates to the standard design and licensing of the BWRX-300 small modular reactor technology. This collaboration strengthens Duke Energy’s commitment to advanced nuclear solutions as a central pillar of its future clean energy strategy.

DUK Stock’s Earnings Estimate

The Zacks Consensus Estimate for DUK’s 2025 and 2026 earnings per share (EPS) indicates an increase of 7.29% and 6.07%, respectively, year over year.
 

The Zacks Consensus Estimate for NextEra Energy’s 2025 and 2026 EPS indicates an increase of 7.29% and 7.84%, respectively, year over year. The Zacks Consensus Estimate for Southern Company’s s 2025 and 2026 EPS indicates an increase of 5.68% and 7.24%, respectively, year over year.

DUK Stock’s Earnings Surprise History

Duke Energy beat on earnings in each of the trailing four quarters, delivering an average surprise of 5.72%.

DUK’s Dividend History

The consistently strong performance of the company has enabled it to reward its shareholders through annual dividend rate hikes. Currently, its annual dividend is $4.26 per share. 

Duke Energy’s targeted dividend payout ratio is in the range of 60-70%. It is anticipated that the company will continue to increase its dividend in the future, driven by its sustained earnings growth. Check Duke Energy’s dividend history here.

DUK’s ROE Higher Than the Industry

Duke Energy’s trailing 12-month return on equity of 9.98% is higher than the industry average of 9.64%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.

DUK Stock Trades at a Premium

Duke Energy is currently trading at 18.55X a premium compared to its industry’s 15.76X on a forward 12-month P/E basis.
 

NextEra Energy is trading at a 21.87X premium, while Southern Company is trading at an 19.96X premium compared with the industry’s forward 12-month P/E.

Summing Up

Duke Energy is accelerating its clean-energy transition through a diverse power mix, major infrastructure investments and a long-term commitment to modern technologies. The company’s strategic investments are also focused on expansion of clean energy. It is also expanding its nuclear capabilities, partnering with GE Hitachi to advance BWRX-300 SMR technology, solidifying nuclear as a core part of its future energy strategy.

However, the company’s premium valuation and lower return than the industry are concerning at the moment. The investors can hold onto this Zacks Rank #3 (Hold) stock and enjoy the benefits of regular dividends and earnings growth estimates. The new investors can wait and look for a better entry point.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research