Is It Too Late To Consider IDACORP (IDA) After Strong Multi Year Share Price Gains

• Wondering whether IDACORP at around US$140.59 still offers value, or if most of the upside is already reflected in the share price? This article focuses squarely on what the current valuation is really telling you.
• The stock is up 10.4% year to date and 22.1% over the past year, with longer term returns of 48.7% over three years and 65.6% over five years. This comes even though the share price has slipped 0.7% over the last week and 3.5% over the last month.
• Recent price moves have come against a backdrop of ongoing investor interest in regulated electric utilities. Many shareholders in the sector watch valuation signals closely when returns have been positive over several years. For IDACORP, the current level gives investors a fresh chance to reassess whether the stock still lines up with their expectations for risk, income, and capital preservation.
• On Simply Wall St's 6 point valuation check, IDACORP scores 1/6. The rest of this article walks through what different valuation methods say about that score, and ends with a way to look beyond the headline metrics to understand valuation in a more complete way.

IDACORP scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: IDACORP Dividend Discount Model (DDM) Analysis

The Dividend Discount Model estimates what a stock could be worth by projecting future dividends per share and discounting them back to today, then comparing that to the current share price.

For IDACORP, the model uses an annual dividend per share of about $3.92, a return on equity of 9.37% and a payout ratio of around 60.12%. The implied long term dividend growth rate in the model is 3.54%, capped from an initial 3.74%, while the broader expected growth input is 3.74%. These assumptions are intended to reflect dividend sustainability without extending recent trends too far into the future.

With these inputs, the DDM produces an estimated intrinsic value of about $110 per share. Compared to the current share price of roughly $140.59, this suggests IDACORP is trading at a premium of about 27.8%, which the model characterizes as overvalued on a dividend basis.

Result: OVERVALUED

Our Dividend Discount Model (DDM) analysis suggests IDACORP may be overvalued by 27.8%. Discover 46 high quality undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for IDACORP.

Approach 2: IDACORP Price vs Earnings

For a profitable company like IDACORP, the P/E ratio is a useful way to see how much you are paying for each dollar of earnings. Investors usually accept a higher P/E if they expect stronger growth or view the stock as lower risk, while slower growth or higher risk generally lines up with a lower, more cautious P/E.

IDACORP currently trades on a P/E of 23.48x. That sits above the Electric Utilities industry average of 21.34x, and below the peer group average of 27.10x. To go a step further, Simply Wall St calculates a Fair Ratio of 21.38x for IDACORP. This is a proprietary estimate of what the P/E might look like given the company’s earnings growth profile, profit margins, risk factors, industry and market cap.

Because the Fair Ratio incorporates company specific fundamentals rather than just broad sector comparisons, it can provide a more tailored anchor than simply lining IDACORP up against peers or the industry. With the Fair Ratio at 21.38x and the actual P/E at 23.48x, the stock currently screens as overvalued on this measure.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your IDACORP Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives on Simply Wall St’s Community page give you a simple story behind the numbers by linking your view of IDACORP’s business, its revenue, earnings and margin estimates, to a financial forecast and a fair value that you can compare directly with the current share price, update automatically when new news or earnings are released, and tailor to your own perspective, such as one investor who builds a Narrative around strong regional growth, electrification trends and rate base expansion that supports a fair value closer to the higher analyst target of US$167, while another focuses more on hydro risk, regulatory uncertainty and rising infrastructure costs and lands nearer the lower target of US$121, using these different fair values to decide whether the current price looks rich or reasonable for their goals.

Do you think there's more to the story for IDACORP? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.