Portland General Electric POR has been left behind in this year’s utilities stock rally: It is trailing its index by more than 17 percentage points for the year to date through mid-September. But we think the market is getting it wrong: It isn’t giving the company any credit for its upside to data center and tech sector electricity demand or improving rate regulation. At current prices, this stock with a near-5% forward dividend yield is one of Morningstar’s top picks in the utilities sector today, trading 23% below our USD 54 fair value estimate. PGE lands on Morningstar’s list of The Best Utilities Stocks to Buy. It’s also one of Morningstar Chief US Market Strategist Dave Sekera’s 4 Stocks to Buy Before They Take Off.

Portland General Electric has plenty of investment opportunities to serve growing electricity demand, meet Oregon’s clean energy requirements, and strengthen the system against natural disasters such as wildfires. Achieving the state’s goals while maintaining reliability will require a large step-up in investment during the next two decades. PGE plans to invest USD 6.5 billion during the next five years, a 20%-plus increase from its investment rate of the past decade. Oregon regulation is mostly constructive, with forward-looking rates and timely decisions. The state’s 20-year integrated resource plan and four-year action plan give PGE and regulators clarity on potential growth investments. Electricity demand growth in the region should reduce regulatory risk as costs are spread over a larger customer base.

Key Morningstar metrics for Portland General Electric

  • Fair Value Estimate: USD 54
  • Star Rating: 5 Stars
  • Economic Moat Rating: Narrow
  • Uncertainty Rating: Low

Economic moat rating

Service territory monopolies and efficient scale advantages are the primary sources of economic moats for regulated utilities such as PGE. State and federal regulators grant PGE exclusive rights to charge customers rates that allow it to earn a fair return on and return of the capital it invests to build, operate, and maintain its system. In exchange for PGE’s service territory monopoly, state and federal regulators set returns at levels that aim to minimize customer costs while offering fair returns for capital providers. This implicit contract between regulators and capital providers should, on balance, allow PGE to earn above its cost of capital in the long run, though observable returns might vary in the short run based on electricity demand, investment cycles, operating costs, and access to financing. Recent regulatory decisions have been positive overall, and public policy supports most of PGE’s investments.

Fair Value estimate for PGE Stock

Our fair value estimate is USD 54 per share. We forecast 7% average annual earnings growth for 2025-28, at the high end of management’s 5%-7% target. PGE is unlikely to reach this growth in 2025 and 2026 due to a less favorable outcome in its 2025 general rate case. However, we expect earnings growth to pick up in 2027 and beyond based on PGE’s growth investment opportunities. We assume that PGE invests at least USD 1.3 billion annually during the next five years. Management has a history of raising its capital investment forecast as new projects present themselves and demand grows. Our discounted cash flow valuation incorporates a 6.1% weighted average cost of capital and a 7.5% cost of equity. This is lower than the 9% rate of return we expect investors will demand of a diversified equity portfolio, reflecting PGE’s lower sensitivity to the economic cycle and lower degree of operating leverage.

Risk and uncertainty

PGE’s ability to grow its rate base and earnings depends on its relationship with Oregon regulators as well as access to capital markets. State legislation requires PGE to reduce carbon emissions on its system by 80% by 2030 and eliminate carbon emissions by 2040. The company plans to exit all coal generation by 2030. Wildfires, extreme summer and winter weather, and stream flows that affect hydropower availability can affect PGE’s operations and finances. Although the Western US has many areas with high fire risk, PGE’s mostly urban service territory and temperate weather make it unlikely that the company would face an extreme wildfire event. Reliance on fossil fuel generation and wholesale spot-market purchases to supplement intermittent renewable energy could affect earnings.

Portland General bulls say

  • Management continues to invest in system upgrades, renewable energy, and energy storage with strong political and regulatory support.
  • PGE’s capital investment budget includes many small projects that can be shifted around to maintain strong credit metrics.
  • Before the 2025 regulatory rate ruling, PGE had settled four consecutive general rate cases, a sign of a mostly constructive regulatory environment that will support growth investment.

Portland General bears say

  • Fluctuations in purchased power costs could mean lower profits for shareholders, even with the company’s power cost adjustment mechanism.
  • Disappointing regulatory outcomes could limit the upside for shareholders from PGE’s planned growth investments.
  • As with all utilities, rising interest rates will lead to higher financing costs and make PGE’s dividend less attractive to investors.

This article was compiled by Susan Dziubinski and Sylvia Hauser. Data as of Sept. 17, 2025, unless otherwise noted.

Terms used in this article

Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at USD 100 and our analysts believe it is worth USD 200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.