| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 15049.45 | 61679 |
| Intrinsic value (DCF) | 120.23 | 394 |
| Graham-Dodd Method | 43497.14 | 178460 |
| Graham Formula | 22126.63 | 90732 |
The Tennessee Valley Authority (TVA) is a federally owned corporation established in 1933, headquartered in Knoxville, Tennessee. As one of the largest public power providers in the U.S., TVA generates electricity through a diversified mix of coal, nuclear, hydroelectric, natural gas, and renewable energy sources. Serving millions of customers across seven southeastern states, TVA plays a critical role in regional energy stability, economic development, and environmental stewardship. Unlike traditional investor-owned utilities, TVA operates as a self-financing entity, reinvesting revenues into infrastructure and sustainability initiatives. Its unique federal charter allows it to provide low-cost, reliable power while supporting flood control, navigation, and land management. With a growing emphasis on decarbonization, TVA is strategically transitioning toward cleaner energy solutions while maintaining its financial strength and operational efficiency.
TVA presents a stable investment opportunity due to its federally backed status, diversified energy portfolio, and essential service role in the Southeast U.S. Its low beta (0.012) indicates minimal correlation with broader market volatility, appealing to risk-averse investors. However, as a government entity, TVA does not offer equity shares—only power bonds (PARRS D 2028)—limiting capital appreciation potential. Revenue ($12.3B) and net income ($1.14B) reflect operational solidity, but zero operating cash flow reported raises questions about liquidity management. The agency’s $934M debt load is moderate relative to its market cap ($12.4B), and its dividend-like payments (equivalent to $0.53 per share) provide income appeal. Key risks include regulatory pressures on coal assets and competition from private renewables developers.
TVA’s competitive advantage stems from its federal mandate, which grants it monopolistic control over power distribution in its service territory and tax-exempt financing privileges. Unlike private utilities, it faces no shareholder pressure, allowing long-term infrastructure investments. Its generation mix (40% carbon-free) outperforms many regional peers in sustainability, though it lags national leaders like NextEra in renewables penetration. TVA’s cost structure benefits from legacy hydro and nuclear assets, enabling below-average retail rates. However, its reliance on coal (15% of fleet) exposes it to transition risks, while its bureaucratic structure may slow innovation compared to agile private competitors. Geographically, TVA’s integrated transmission network provides resilience against weather disruptions—a key differentiator in storm-prone regions. Its economic development programs (e.g., industrial rate discounts) further entrench customer loyalty.