10 Best Undervalued Utilities Stocks for October 2025
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Market Overview & Selection Criteria
The utilities sector remains a cornerstone for defensive portfolios, offering stability and consistent cash flows even during volatile market cycles. For 2025, our selection methodology prioritizes intrinsic value, quality ratings, and growth catalysts. Each stock featured below is extracted from ValueSense’s proprietary screening, focusing on undervalued companies with robust financials, sector leadership, and actionable growth drivers. We analyze key metrics such as market cap, P/E ratios, revenue growth, free cash flow, and risk factors to ensure a balanced, diversified watchlist.
Featured Stock Analysis
National Grid plc (NGG)
| Metric | Value |
|---|---|
| Market Cap | $74.5B |
| Quality Rating | 6.0 |
| Intrinsic Value | $194.8 |
| 1Y Return | 13.2% |
| Revenue | £38.2B |
| Free Cash Flow | (£2,795.0M) |
| Revenue Growth | (4.7%) |
| FCF margin | (7.3%) |
| Gross margin | 62.6% |
| ROIC | 9.0% |
| Total Debt to Equity | 125.4% |
Investment Thesis
National Grid plc stands out as a global leader in electricity and gas transmission, with a substantial market cap of $74.5B. The company’s intrinsic value of $194.8 suggests significant upside potential relative to current market pricing. Its quality rating of 6.0 reflects solid operational efficiency, supported by a robust gross margin of 62.6% and a healthy ROIC of 9.0%. Despite a negative free cash flow of £2,795.0M, National Grid’s scale and regulatory advantages position it well for long-term stability.
Key Catalysts
- Expansion in renewable energy infrastructure
- Regulatory support for grid modernization
- Consistent revenue base £38.2B
- Attractive 1Y return of 13.2%
Risk Factors
- High total debt to equity 125.4%
- Negative free cash flow and FCF margin -7.3%
- Revenue growth contraction -4.7%
NGG intrinsic value analysis
Exelon Corporation (EXC)
| Metric | Value |
|---|---|
| Market Cap | $47.5B |
| Quality Rating | 5.6 |
| Intrinsic Value | $67.9 |
| 1Y Return | 17.8% |
| Revenue | $23.8B |
| Free Cash Flow | ($1,764.0M) |
| Revenue Growth | 4.5% |
| FCF margin | (7.4%) |
| Gross margin | 41.8% |
| ROIC | 5.0% |
| Total Debt to Equity | 176.8% |
Investment Thesis
Exelon Corporation, with a market cap of $47.5B, is a major player in the U.S. utilities sector. Its intrinsic value of $67.9 and quality rating of 5.6 indicate moderate undervaluation and operational strength. Exelon’s revenue growth of 4.5% and a 1Y return of 17.8% highlight its resilience and ability to generate shareholder value, even as free cash flow remains negative $1,764.0M.
Key Catalysts
- Ongoing investments in clean energy
- Regulatory tailwinds for grid reliability
- Strong gross margin 41.8%
- Solid market positioning
Risk Factors
- Elevated debt to equity ratio 176.8%
- Negative free cash flow and FCF margin -7.4%
- Moderate ROIC 5.0%
EXC fundamental analysis
Consolidated Edison, Inc. (ED)
| Metric | Value |
|---|---|
| Market Cap | $36.4B |
| Quality Rating | 5.3 |
| Intrinsic Value | $120.7 |
| 1Y Return | -3.1% |
| Revenue | $16.2B |
| Free Cash Flow | ($278.0M) |
| Revenue Growth | 9.0% |
| FCF margin | (1.7%) |
| Gross margin | 55.8% |
| ROIC | 4.2% |
| Total Debt to Equity | 114.0% |
Investment Thesis
Consolidated Edison, Inc. is a stalwart in the U.S. utilities market, boasting a market cap of $36.4B. Its intrinsic value of $120.7 and quality rating of 5.3 suggest fair valuation with room for improvement. The company’s revenue growth of 9.0% and gross margin of 55.8% underscore its ability to maintain profitability, even as its 1Y return -3.1% reflects sector headwinds.
Key Catalysts
- Urban infrastructure upgrades
- Stable revenue stream $16.2B
- High gross margin 55.8%
- Focus on sustainable energy initiatives
Risk Factors
- Negative 1Y return -3.1%
- High debt to equity 114.0%
- Negative free cash flow $278.0M
ED stock analysis
PG&E Corporation (PCG)
| Metric | Value |
|---|---|
| Market Cap | $36.3B |
| Quality Rating | 6.0 |
| Intrinsic Value | $30.9 |
| 1Y Return | -19.4% |
| Revenue | $24.5B |
| Free Cash Flow | $6,748.0M |
| Revenue Growth | (1.3%) |
| FCF margin | 27.6% |
| Gross margin | 28.4% |
| ROIC | 4.7% |
| Total Debt to Equity | 189.8% |
Investment Thesis
PG&E Corporation, with a market cap of $36.3B, is a key utility provider in California. Its intrinsic value of $30.9 and quality rating of 6.0 point to strong fundamentals. Notably, PG&E’s free cash flow is positive $6,748.0M, and its FCF margin of 27.6% is among the highest in the sector, despite a negative 1Y return -19.4%.
Key Catalysts
- Positive free cash flow and strong FCF margin
- Grid modernization and wildfire mitigation investments
- Large revenue base $24.5B
Risk Factors
- Negative 1Y return -19.4%
- High debt to equity 189.8%
- Low gross margin 28.4%
PCG value analysis
NRG Energy, Inc. (NRG)
| Metric | Value |
|---|---|
| Market Cap | $33.3B |
| Quality Rating | 5.6 |
| Intrinsic Value | $209.5 |
| 1Y Return | 87.8% |
| Revenue | $29.4B |
| Free Cash Flow | $1,387.0M |
| Revenue Growth | 1.9% |
| FCF margin | 4.7% |
| Gross margin | 17.3% |
| ROIC | 10.9% |
| Total Debt to Equity | 485.8% |
Investment Thesis
NRG Energy, Inc. is a dynamic player with a market cap of $33.3B and an intrinsic value of $209.5. Its quality rating of 5.6 and exceptional 1Y return 87.8% highlight its growth trajectory. NRG’s ROIC of 10.9% and positive free cash flow $1,387.0M signal strong capital efficiency and operational momentum.
Key Catalysts
- Leading performance in 1Y return 87.8%
- Expansion in renewable energy and retail power
- High ROIC 10.9%
Risk Factors
- Extremely high debt to equity 485.8%
- Low gross margin 17.3%
- Moderate FCF margin 4.7%
NRG stock analysis
DTE Energy Company JR SUB DB 2017 E (DTW)
| Metric | Value |
|---|---|
| Market Cap | $29.3B |
| Quality Rating | 6.2 |
| Intrinsic Value | $25.3 |
| 1Y Return | -8.1% |
| Revenue | $14.1B |
| Free Cash Flow | $2,993.0M |
| Revenue Growth | 14.9% |
| FCF margin | 21.2% |
| Gross margin | 75.8% |
| ROIC | 6.4% |
| Total Debt to Equity | 204.6% |
Investment Thesis
DTE Energy Company’s junior subordinated debenture (DTW) offers exposure to a $29.3B market cap entity with a quality rating of 6.2 and intrinsic value of $25.3. The company’s revenue growth 14.9% and gross margin 75.8% are sector-leading, complemented by a strong FCF margin 21.2%.
Key Catalysts
- Highest gross margin 75.8% among peers
- Strong revenue growth 14.9%
- Positive free cash flow $2,993.0M
Risk Factors
- Negative 1Y return -8.1%
- High debt to equity 204.6%
- Moderate ROIC 6.4%
DTW value analysis
FirstEnergy Corp. (FE)
| Metric | Value |
|---|---|
| Market Cap | $27.0B |
| Quality Rating | 6.1 |
| Intrinsic Value | $64.8 |
| 1Y Return | 8.8% |
| Revenue | $14.1B |
| Free Cash Flow | $235.0M |
| Revenue Growth | 6.4% |
| FCF margin | 1.7% |
| Gross margin | 67.3% |
| ROIC | 4.8% |
| Total Debt to Equity | 182.2% |
Investment Thesis
FirstEnergy Corp. is a $27.0B market cap utility with a quality rating of 6.1 and intrinsic value of $64.8. Its 1Y return 8.8% and revenue growth 6.4% indicate steady performance. The company’s gross margin 67.3% and positive free cash flow $235.0M further reinforce its operational strength.
Key Catalysts
- Consistent revenue growth 6.4%
- High gross margin 67.3%
- Positive free cash flow
Risk Factors
- High debt to equity 182.2%
- Moderate ROIC 4.8%
- FCF margin 1.7% is relatively low
FE stock analysis
Eversource Energy (ES)
| Metric | Value |
|---|---|
| Market Cap | $26.3B |
| Quality Rating | 5.6 |
| Intrinsic Value | $101.9 |
| 1Y Return | 9.9% |
| Revenue | $13.0B |
| Free Cash Flow | ($1,013.4M) |
| Revenue Growth | 14.4% |
| FCF margin | (7.8%) |
| Gross margin | 50.1% |
| ROIC | 4.6% |
| Total Debt to Equity | 188.2% |
Investment Thesis
Eversource Energy, with a market cap of $26.3B, holds a quality rating of 5.6 and an intrinsic value of $101.9. Its revenue growth 14.4% and gross margin 50.1% are notable, though free cash flow remains negative $1,013.4M. The company’s 1Y return 9.9% and sector positioning make it a solid watchlist candidate.
Key Catalysts
- Strong revenue growth 14.4%
- Stable gross margin 50.1%
- Sector leadership in New England
Risk Factors
- Negative free cash flow and FCF margin -7.8%
- High debt to equity 188.2%
- Moderate ROIC 4.6%
ES fundamental analysis
CenterPoint Energy, Inc. (CNP)
| Metric | Value |
|---|---|
| Market Cap | $25.9B |
| Quality Rating | 6.2 |
| Intrinsic Value | $44.6 |
| 1Y Return | 33.5% |
| Revenue | $8,982.0M |
| Free Cash Flow | ($3,028.0M) |
| Revenue Growth | 4.8% |
| FCF margin | (33.7%) |
| Gross margin | 44.0% |
| ROIC | 4.6% |
| Total Debt to Equity | 196.2% |
Investment Thesis
CenterPoint Energy, Inc. is a $25.9B market cap utility with a quality rating of 6.2 and intrinsic value of $44.6. Its 1Y return 33.5% and revenue growth 4.8% demonstrate solid momentum, though free cash flow is negative $3,028.0M. The company’s gross margin 44.0% and sector diversification are key strengths.
Key Catalysts
- Strong 1Y return 33.5%
- Diversified utility operations
- Stable revenue base
Risk Factors
- Negative free cash flow and FCF margin -33.7%
- High debt to equity 196.2%
- Moderate ROIC 4.6%
CNP value analysis
Centrais Elétricas Brasileiras S.A. - Eletrobrás (EBR-B)
| Metric | Value |
|---|---|
| Market Cap | $22.8B |
| Quality Rating | 6.9 |
| Intrinsic Value | $15.1 |
| 1Y Return | 46.5% |
| Revenue | R$43.7B |
| Free Cash Flow | R$13.6B |
| Revenue Growth | 22.0% |
| FCF margin | 31.2% |
| Gross margin | 82.4% |
| ROIC | 9.5% |
| Total Debt to Equity | 61.9% |
Investment Thesis
Eletrobrás, Brazil’s largest power utility, boasts a market cap of $22.8B and the highest quality rating 6.9 in this collection. Its intrinsic value of $15.1 and outstanding revenue growth 22.0% set it apart. Eletrobrás’s gross margin 82.4% and FCF margin 31.2% are sector-leading, with a 1Y return of 46.5%.
Key Catalysts
- Highest quality rating 6.9 and gross margin 82.4%
- Strong revenue growth 22.0%
- Positive free cash flow R$13.6B
Risk Factors
- Currency and geopolitical risks (Brazil)
- Moderate debt to equity 61.9%
- Market volatility in emerging markets
EBR-B stock analysis
Portfolio Diversification Insights
This utilities-focused portfolio spans U.S., U.K., and Brazilian markets, offering geographic and regulatory diversification. Sector allocation is balanced between transmission, generation, and retail utilities, with exposure to both traditional and renewable energy themes. High-quality ratings and varied free cash flow profiles help mitigate risk, while strong performers like NRG and Eletrobrás provide growth potential alongside defensive stalwarts such as National Grid and Consolidated Edison.
Market Timing & Entry Strategies
Utilities stocks often perform well during periods of economic uncertainty due to their defensive nature and stable cash flows. Entry strategies may include dollar-cost averaging to reduce timing risk, monitoring for regulatory changes, and watching for pullbacks in high-debt names. Investors should consider sector rotation trends and macroeconomic signals when evaluating entry points, focusing on companies with improving free cash flow and operational efficiency.
Explore More Investment Opportunities
For investors seeking undervalued companies with high fundamental quality, our analytics team provides curated stock lists:
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FAQ Section
Q1: How were these stocks selected?
Stocks were chosen using ValueSense’s proprietary screening, focusing on intrinsic value, quality ratings, financial metrics, and sector diversification. Only companies with strong fundamentals and actionable growth drivers were included.
Q2: What's the best stock from this list?
Eletrobrás (EBR-B) stands out with the highest quality rating 6.9, sector-leading gross margin 82.4%, and robust revenue growth 22.0%. However, the best stock depends on individual investment goals and risk tolerance.
Q3: Should I buy all these stocks or diversify?
Diversification is key. This watchlist is designed to provide exposure across multiple geographies and utility sub-sectors, reducing risk and enhancing portfolio resilience.
Q4: What are the biggest risks with these picks?
Major risks include high debt levels, negative free cash flow in some companies, regulatory changes, and market volatility—especially in emerging markets like Brazil.
Q5: When is the best time to invest in these stocks?
Utilities stocks are often attractive during economic uncertainty or market corrections. Entry strategies such as dollar-cost averaging and monitoring for sector rotation can help optimize timing.
This article is for educational purposes and reflects analysis based on ValueSense platform data as of October 2025. For more insights and research, visit ValueSense.