Research · Sep 3, 2026
[TXNM] TXNM Energy Thesis 2026: Regulated Rate-Base Growth Meets the Blackstone Take-Private
TXNM Energy, Inc. (NYSE: TXNM) is a US regulated electric utility holding company — renamed from PNM Resources in 2024 — that owns Public Service Company of New Mexico (PNM, a New Mexico regulated vertically-integrated electric utility) and Texas-New Mexico Power (TNMP, a Texas transmission-and-distribution-only utility within ERCOT), headquartered in Albuquerque New Mexico. TXNM enters FY2026 with FY2025 revenue ~$1.9-2.2B (+3-9% YoY off ~$2.0B FY2024) and adj. EPS ~$2.65-3.15, reflecting ~$1.3-1.5B aggregate PNM revenue and ~$0.5-0.7B aggregate TNMP revenue, all under CEO Don Tarry (CEO since ~2024, ~1-2 year tenure, ~20+ year PNM/TXNM career in CFO/COO roles, who succeeded Pat Vincent-Collawn — now Executive Chair — and oversaw the 2024 rebrand to TXNM Energy and the pending Blackstone take-private). The first thesis pillar is the Regulated Rate-Base Growth (PNM New Mexico + TNMP Texas) pipeline (~$8-10B aggregate rate base growing ~9-11%+ CAGR): PNM, a New Mexico regulated vertically-integrated electric utility serving ~550,000-600,000 customers, transitioning its generation fleet off coal — having exited San Juan in 2022 with Four Corners exit around 2031 — and replacing it with solar, wind and battery storage to comply with New Mexico's Energy Transition Act (~100% carbon-free by 2040), with NMPRC and FERC rate regulation and a ~$5-6B rate base; and TNMP, a Texas T&D-only utility within ERCOT serving ~280,000-320,000 distribution customers (no generation, no commodity risk) in a fast-growing service territory (West Texas, Gulf Coast, North Texas) with population, commercial, oilfield and especially data-center/large-load interconnection demand, Texas PUC rate regulation with DCRF/TCRF interim mechanisms, and a ~$3-4B rate base growing fast; the company runs a ~$7-9B+ five-year capex plan with ~9.0-10.0% allowed ROEs targeting ~7-9% EPS growth, and FY2026 catalyst is a ~$9-11B rate base with continued PNM generation transition and TNMP load-driven T&D growth. The second pillar — the defining near-term thesis — is the Blackstone Infrastructure Take-Private pipeline: a pending acquisition announced around May 2025 at ~$61.25 per share all-cash (~$11-12B+ enterprise value including assumed debt, with no financing condition), subject to a regulatory approval path led by the NMPRC (the longest pole, requiring merger-conditions negotiation on rate credits, reliability commitments and governance — and recall the NMPRC rejected the prior Avangrid/PNM deal in 2021), plus Texas PUC, FERC, CFIUS and HSR clearances, with an expected close around 2026 on a ~12-18 month timeline; if the deal breaks, TXNM continues as a standalone regulated utility with the rate-base-growth thesis intact (~7-9% EPS growth plus dividend) — the standalone story is the downside floor — and the stock currently trades at a merger-arb spread below $61.25 reflecting regulatory and timing risk. The capital story: a ~$1.55-1.75 aggregate annual dividend per share (~2.5-3.5% yield; ~50-60% payout; quarterly; modest growth or held flat pending close), no buybacks (a capex-funding utility), ~$5-7B net debt (PNM and TNMP first-mortgage bonds plus TXNM holdco debt, with ongoing equity issuance to fund capex — or Blackstone-funded post-close), ~60-65% debt-to-total-cap, a BBB/Baa2 to BBB+/Baa1 investment-grade credit profile (with a rating-agency review tied to the Blackstone deal), ~92-95M shares and ~$0.5-1.0B liquidity. At ~$50-60 per share (a spread below the $61.25 cash price) on ~92-95M shares (~$4.7-5.7B equity, ~$11-12B+ EV) TXNM is essentially a merger-arb situation; on a standalone basis it would trade at ~15-19x P/E, ~1.5-2.2x P/BV and ~9-11x EV/EBITDA versus regulated-electric peers Pinnacle West/APS, IDACORP, Xcel Energy, Black Hills, NorthWestern Energy, Avista, Portland General Electric and the taken-private ALLETE precedent. FY2026 base case: the Blackstone deal closes at ~$61.25/share cash around 2026 after NMPRC, Texas PUC, FERC, CFIUS and HSR approvals — total return is the deal spread; standalone earnings are ~$2.85-3.40 adj. EPS with ~9-11%+ rate-base growth. Bull case: a faster/cleaner close (constructive NMPRC conditions, spread compresses quickly to $61.25) — or, standalone, an accelerating rate-base thesis (TNMP large-load interconnection adding capex, constructive NMPRC and Texas PUC rate cases, ~9-10% EPS growth, dividend growth) — drives realization at/near $61.25 or a re-rating toward ~18-20x standalone P/E. Bear case: the NMPRC rejects the deal or imposes onerous conditions (a repeat of the 2021 Avangrid outcome — the key risk — breaking or materially delaying it; the stock re-rates to the standalone DCF), Texas PUC/FERC/CFIUS delays, an extended timeline (deal-spread cost-of-carry into 2027), standalone regulatory risk (contentious NMPRC rate cases, clean-energy transition execution, interconnection queues, wildfire/drought, interest-rate headwind on the bond-proxy valuation, equity dilution, customer-affordability/rate-fatigue) and TNMP load growth not materializing drive a re-rating toward ~13-16x standalone P/E with ~$2.50-2.90 adj. EPS. The thesis depends on the Regulated Rate-Base Growth (PNM New Mexico + TNMP Texas) pipeline plus the Blackstone Infrastructure Take-Private pipeline plus the ~$8-10B rate base growing ~9-11%+ plus the PNM generation transition plus TNMP's fast-growing ERCOT T&D plus the data-center load tailwind plus the NMPRC, Texas PUC, FERC and CFIUS approvals plus the standalone-plan downside floor and Don Tarry's rate-base and Blackstone deal-close execution.