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Market Doesn't Appreciate Dominion's Strategy Pivot

Scana, tax reform, and the FERC required the utility to rethink its financing plans.

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Tax reform, a surprise ruling on master limited partnerships, and the Scana merger required  Dominion Energy (D) to rethink its financing plans, but we believe the underlying profitability of its businesses is intact.

Dominion Energy changed its name from Dominion Resources in 2017. More important for investors is that the company has also made a strategy pivot. Since 2010, the company has focused on developing new wide-moat projects with conservative strategies, exited the exploration and production business, sold no-moat businesses, and made significant investments in moaty utility infrastructure. We expect wide-moat businesses to generate roughly half of Dominion’s operating earnings by 2023.

Charles Fishman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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