Dominion Energy (D) Stock: Navigating Earnings Momentum and Valuation Opportunities

Dominion Energy (D) has emerged as a utilities leader poised for recovery amid sector-wide volatility, thanks to its robust fundamentals, upcoming earnings catalysts, and undervaluation relative to peers. With a Q2 2025 earnings report set for August 1, 2025, and a track record of beating estimates, investors have a compelling entry point to capitalize on the company's stability and growth prospects. This article dissects the metrics and catalysts supporting a strategic long position, while addressing risks tied to broader market headwinds.

Earnings Momentum and the Q2 Catalyst

Dominion's Q1 2025 results, reported in May, delivered a 40% year-over-year increase in EPS to $0.65, exceeding consensus expectations. Analysts now project Q2 2025 EPS of $0.77—a 40% surge from the prior-year period—driven by regulated rate hikes, higher sales volumes, and operational efficiencies. The Zacks model predicts a 1.72% earnings beat for the quarter, with consensus estimates for full-year 2025 EPS at $3.39, up 22% from 2024.

The upcoming August earnings report will be a critical test of the company's ability to sustain momentum. A strong beat could revalue the stock, especially as the Zacks Rank of #3 (Hold) suggests undervaluation. The stock's 5.9% price gain over the past month and a Momentum Style Score of “A” further indicate investor confidence in its short-term trajectory.

Valuation: A Discounted Growth Story

Dominion's valuation metrics highlight its attractiveness. With a Forward P/E of 16.51—below the Utility - Electric Power industry average of 17.9—and a PEG ratio of 1.22 (versus the industry's 2.63), the stock trades at a discount relative to its growth prospects. This undervaluation is particularly notable given its 22% EPS growth forecast for 2025 and its role as the largest producer of carbon-free electricity in New England.

The company's dividend yield of 5%—backed by a 43-year streak of consecutive increases—adds stability. This combination of growth, value, and income makes D an appealing option for investors seeking both capital appreciation and steady payouts.

Catalysts: Regulatory Stability and Leadership Transitions

Dominion's strategic reorganization post-Diane Leopold's June 1 retirement has positioned it to capitalize on regulatory and operational opportunities. Key promotions, such as Carlos Brown's oversight of major construction projects and Mark Mitchell's leadership in renewables infrastructure, signal a focus on executing high-priority initiatives like the $7 billion Coastal Virginia Offshore Wind project.

Regulatory stability is another tailwind. Proposed base rate increases in Virginia (the first since 1992) and fuel cost adjustments, if approved, will boost cash flows for grid modernization and carbon-free projects. These moves align with the company's goal to reduce emissions by 70% by 2030, a strategy shareholders overwhelmingly supported at its 2025 annual meeting.

Risks to Consider

Despite Dominion's strengths, risks remain. The Coastal Virginia project faces cost-overrun concerns, which prompted JPMorgan to downgrade the stock to “Underweight.” Additionally, macroeconomic factors—such as rising interest rates or a slowdown in energy demand—could pressure utility stocks broadly. The sector's recent volatility, with Dominion falling 3% year-to-date despite outperforming peers, underscores this risk.

Investment Strategy: A “Hold-to-Buy” Play for the Long Run

Dominion Energy's confluence of earnings momentum, valuation discounts, and strategic execution makes it a compelling “Hold-to-Buy” opportunity. Investors should consider accumulating positions ahead of the August earnings report, with a focus on the following:

1. Entry Point: Look for dips below $40, where the stock's 50-day moving average currently resides.
2. Catalysts: Q2 earnings beat, regulatory approvals for rate hikes, and progress on offshore wind projects.
3. Risk Management: Set a stop-loss at $36.50 (10% below current levels) to protect against sector-wide declines.

While Dominion's PEG ratio and dividend yield argue for long-term holding, the stock's undervaluation relative to peers and growth trajectory justify a strategic entry now.

Conclusion

Dominion Energy's blend of earnings power, valuation discounts, and leadership continuity positions it as a utilities leader primed to outperform in a recovering market. Despite sector volatility, its fundamentals—backed by regulatory tailwinds and a resilient dividend—make it a standout opportunity for investors prioritizing stability and growth. As the August earnings report approaches, now is the time to position for a revaluation that could unlock significant upside.

Stay disciplined, and focus on the fundamentals. This is Dominion's time to shine.