MGEE: Hold
Published 16 Sep 2026, 17:17 BST. This is the frozen version, not the current recommendation.
Why this assessment was issued
First recorded assessment.
Neither a positive nor a negative classification meets the stated requirements. Review cash generation, business evidence, earnings support.
Supporting evidence
Year-to-date profit has improved
Across 2 completed quarters since 2025-12-31, net income was 81.8m versus 68.1m in the matching prior-year periods (USD). Check whether the latest quarter changes that direction.
Borrowing is lower relative to earnings
Net debt / EBITDA: 3.1× for MGEE, against 4.0× across 12 comparable peers.
Opposing evidence
Capital spending changes the cash picture
Operating cash covers 1.86 times profit, but cash after capital spending covers -1.10 times. Cash generation is stronger before the investment bill is paid.
The profit margin narrowed
The latest quarterly operating margin was 20.2%, -1.2 percentage points from a year earlier. Compare the sales and margin contributions below.
The original scenarios
| Scenario | Sales growth | Profit margin | Model value |
|---|---|---|---|
| Weaker | 3.8% | 16.8% | $76.60 |
| Central | 7.4% | 18.6% | $98.55 |
| Stronger | 11.0% | 20.5% | $124.10 |
Method: Earnings and historical valuation. A sufficiently complete, positive earnings record allows the stock's own P/E history to be used. These scenarios are not probability intervals.
Original assumptions and checks
| eps | 4.07 |
|---|---|
| cash | 10737000.0 |
| debt | 899613000.0 |
| years | 1.212867898699521 |
| growth | 7.4271242102389 |
| margin | 19.454838583854485 |
| profit | 149633000.0 |
| cash_ok | False |
| debt_ok | True |
| growths | [4.272910731244073, 10.581337689233727, 10.838471023427875, 1.0931189323432733] |
| revenue | 769130000.0 |
| downside | 0 |
| leverage | 3.122467690772857 |
| multiple | 23.177710843373497 |
| free_cash | -164264000.0 |
| buy_hurdle | 15 |
| volatility | 20.261515192821285 |
| history_end | 2026-09-11 |
| reward_risk | Not available |
| annual_years | 3 |
| usable_weeks | 157 |
| history_start | 2023-09-15 |
| history_weeks | 157 |
| financial_date | 2026-06-30 |
| interest_cover | 4.59518641124437 |
| operating_cash | 278109000.0 |
| uncapped_growth | 7.4271242102389 |
| current_multiple | 18.791154791154792 |
| projected_margin | 18.63280880716041 |
| historical_margin | 17.810779030466332 |
Recent price · Passed. Weekly close dated 2026-09-11.
Suitable business model · Passed. Capital spending and funding matter. Use operating cash flow with explicit reinvestment; this does not replace a regulated rate-base review.
Four quarters · Passed. Four quarters ending 2026-06-30.
Current financials · Passed. Statements through 2026-06-30; factor prices dated 2026-09-11.
Annual record · Passed. 3 consecutive annual profit margins, including loss years.
Comparable earnings history · Passed. P/E is usable in 157 of 157 weeks. At least 52 usable weeks and 70% coverage are required; excluding too many loss or missing weeks would bias the target.
Earnings and price dates · Passed. Earnings-release EPS $4.07, for four quarters ending 2026-06-30.
Price risk · Passed. Risk uses the latest 52 weekly price changes.
Comparable sales growth · Passed. Growth uses the median of four quarterly year-on-year comparisons.
Positive statement earnings · Passed. Trailing statement profit is positive.
Earnings reconciliation · Passed. Release EPS is $4.07; statement-derived EPS is $3.96. The difference is within the 5% review threshold; this does not prove there are no unusual items.
Statement totals · Passed. The latest four quarters agree with the trailing snapshot within 5%.
Cash and borrowing · Passed. Cash generation, debt and interest-cover figures are available.
Target publication review · Passed. The model estimate is within SM's automatic publication range of one quarter to four times the current price. This is a review threshold, not evidence that the market price is correct.
Policy sm-review-2-research · Model sm-assessment-14-operating-capital · Data 24a67ef14974.