Utility Stock Valuation in the Post-Election Regulatory Landscape: Assessing PSEG's Undervaluation and Risk Mitigation

The U.S. utility sector is navigating a transformative period shaped by post-2024 election regulatory shifts. With a potential Trump administration prioritizing streamlined permitting for energy projects and a slower transition to renewables, utilities with diversified portfolios-particularly those with nuclear assets-are gaining strategic advantages. Public Service Enterprise Group (PSEG), a major player in New Jersey, exemplifies this dynamic. This analysis evaluates PSEG's valuation metrics, regulatory risks, and long-term growth potential in the context of evolving policy frameworks.

Regulatory Tailwinds and Sector-Wide Shifts

Post-2024 regulatory changes have created a bifurcated landscape for utilities. A Republican-led agenda emphasizes easing permitting for nuclear, natural gas, and coal projects while scaling back incentives for renewables (except offshore wind), according to EY. This aligns with PSEG's strategic focus on nuclear energy and grid modernization. The company's Salem and Hope Creek nuclear plants, which supplied 7.9 terawatt hours in Q3 2025, benefit from streamlined permitting and extended operational lifespans, as noted in PSEG narrows 2025 earnings guidance. Additionally, PSEG's $3.8 billion 2025 capital spending plan-directed toward infrastructure upgrades and energy efficiency-positions it to capitalize on the sector's "super-cycle" of demand growth driven by AI data centers and electrification, as described in Gabelli.

However, regulatory uncertainty persists. New Jersey's incoming Governor Mikie Sherrill has pledged to freeze utility rates and demand greater transparency, introducing short-term risks for PSEG, according to Utility Dive. Yet the company's proactive engagement with regulators-highlighted by CEO Ralph LaRossa's emphasis on collaboration-suggests a capacity to navigate these challenges while securing policy support for rate base initiatives like battery storage and transmission upgrades, as noted in Investing.com.

Valuation Metrics: Undervaluation Amid Sector Averages

PSEG's valuation appears compelling when compared to industry peers. As of Q3 2025, the stock trades at a forward P/E ratio of 19x, below the utilities sector's 3-year average of 22.5x, according to Simply Wall St. Its dividend yield, while not explicitly stated in recent reports, is projected to remain competitive given its reaffirmed 5-7% annual earnings growth target through 2029, as reported in The Globe and Mail. This contrasts with peers like Eversource Energy (P/E of 12x, 5% yield) and Duke Energy (5-7% growth target), which offer lower valuations but less exposure to high-margin nuclear assets, according to Morningstar.

PSEG's earnings resilience further strengthens its case. Q3 2025 results showed $1.24 in net income per share, exceeding expectations, with non-GAAP operating earnings of $1.13 per share, according to MarketScreener. Analysts have raised full-year guidance to $4.00–$4.06 per share, reflecting confidence in its capital allocation strategy, as reported in Tokenist.

Risk Mitigation and Strategic Positioning

PSEG's regulatory risk mitigation hinges on its dual focus on nuclear energy and grid modernization. The company's Salem nuclear plant expansion-planned for 2027–2029-leverages the scarcity value of carbon-free baseload power, a critical asset in a policy environment that prioritizes reliability over rapid decarbonization, according to Fool. Meanwhile, its $2.9 billion investment in energy efficiency programs and on-bill repayment options for customers reduces exposure to supply-demand imbalances in the PJM region, as noted in Fool.

Legislative efforts in New Jersey to allow utilities to own generation could further unlock value, enabling PSEG to develop solar and storage projects alongside its nuclear fleet, as discussed in Fool.

Conclusion: A Compelling Case for PSEG

While regulatory headwinds exist, PSEG's strategic alignment with post-election policy priorities-nuclear expansion, grid resilience, and affordability-positions it as a standout in the utility sector. Its valuation, earnings trajectory, and proactive risk management suggest undervaluation relative to peers. Investors seeking defensive exposure with upside potential should consider PSEG's unique positioning in a regulatory landscape increasingly favorable to traditional energy infrastructure.