Operating margins have experienced significant compression, falling from a 34.6% peak in 2024Q3 to 15.3% in 2026Q1, suggesting that regulatory recovery is failing to keep pace with operational costs.
| Revenue | 2.19B | 2.17B | 1.97B | 1.94B | 2.25B | 1.78B | 1.52B | 1.46B |
| Revenue Growth % | 8.46% | 9.86% | 1.65% | -13.8% | 26.4% | 16.87% | 4.49% | - |
| Cost of Revenue | 1.35B | 1.34B | 1.16B | 1.31B | 1.53B | 1.15B | 938.67M | 892.93M |
| Gross Profit | 841.66M | 824.79M | 810.16M | 627.1M | 714.73M | 625.65M | 584.24M | 564.58M |
| Gross Margin % | 38.47% | 38.09% | 41.1% | 32.34% | 31.77% | 35.15% | 38.36% | 38.74% |
| Gross Profit Growth % | - | 1.81% | 29.19% | -12.26% | 14.24% | 7.09% | 3.48% | - |
| Operating Expenses | 396.09M | 384.35M | 347.7M | 323.84M | 320.14M | 316.3M | 297.86M | 269.28M |
| Other Operating Expenses | - | - | - | - | - | - | - | - |
| EBITDA | 882.34M | 866.82M | 885.48M | 656.96M | 735.72M | 629.56M | 601.05M | 596.36M |
| EBITDA Margin % | 40.33% | 40.03% | 44.92% | 33.88% | 32.7% | 35.37% | 39.47% | 40.92% |
| EBITDA Growth % | -0.14% | -2.11% | 34.78% | -10.71% | 16.86% | 4.74% | 0.79% | - |
| Depreciation & Amortization | 436.77M | 425.64M | 423.01M | 353.69M | 341.12M | 320.21M | 314.67M | 301.07M |
| D&A / Revenue % | 19.96% | 19.65% | 21.46% | 18.24% | 15.16% | 17.99% | 20.66% | 20.66% |
| Operating Income (EBIT) | 445.57M | 441.18M | 462.47M | 303.26M | 394.59M | 309.35M | 286.38M | 295.3M |
| Operating Margin % | 20.37% | 20.37% | 23.46% | 15.64% | 17.54% | 17.38% | 18.8% | 20.26% |
| Operating Income Growth % | - | -4.6% | 52.5% | -23.15% | 27.56% | 8.02% | -3.02% | - |
| Interest Expense | 4M | 335M | 228.07M | 190.35M | 127.91M | 96.88M | 114.39M | 121.02M |
| Interest Coverage | - | 1.54x | 2.22x | 1.44x | 2.67x | 3.55x | 2.84x | 1.60x |
| Interest / Revenue % | 0.18% | 15.47% | 11.57% | 9.82% | 5.69% | 5.44% | 7.51% | 8.3% |
| Non-Operating Income | -4M | -1000K | -1000K | -1000K | -1000K | -1000K | -1000K | -1000K |
| Pretax Income | 174.19M | 180.01M | 280.24M | 90.53M | 211.31M | 244.43M | 207.95M | 66.85M |
| Pretax Margin % | 7.96% | 8.31% | 14.22% | 4.67% | 9.39% | 13.73% | 13.65% | 4.59% |
| Income Tax | 9.16M | 10.19M | 21.52M | -16.35M | 26.13M | 32.58M | 20.64M | -25.28M |
| Effective Tax Rate % | 5.26% | 5.66% | 7.68% | -18.06% | 12.37% | 13.33% | 9.92% | -37.82% |
| Net Income | 146.7M | 151.36M | 242.68M | 88.35M | 170.06M | 196.36M | 173.3M | 77.89M |
| Net Margin % | 6.71% | 6.99% | 12.31% | 4.56% | 7.56% | 11.03% | 11.38% | 5.34% |
| Net Income Growth % | -28.23% | -37.63% | 174.69% | -48.05% | -13.39% | 13.3% | 122.5% | - |
| EPS (Diluted) | 1.57 | 1.62 | 2.67 | 1.02 | 1.97 | 2.27 | 2.15 | 0.96 |
| EPS Growth % | -38.55% | -39.33% | 161.76% | -48.22% | -13.22% | 5.58% | 123.17% | - |
| EPS (Basic) | - | 1.63 | 2.67 | 1.02 | 1.97 | 2.28 | 2.16 | 0.97 |
| Diluted Shares Outstanding | 93.18M | 93.18M | 90.59M | 86.37M | 86.17M | 86.11M | 80.3M | 80.3M |
High regulatory and operational volatility
As reported in recent financial statements, TXNM's revenue growth has fluctuated significantly, reaching a 15.7% peak in 2024Q4 before moderating, suggesting that revenue trajectory remains heavily dependent on seasonal demand and the timing of rate case outcomes rather than consistent, organic volumetric expansion across its service territories.
The revenue profile appears sensitive to the distinct regulatory environments of New Mexico and Texas, where rate recovery mechanisms may not fully smooth out seasonal volatility. Investors should monitor whether the recent rebranding to TXNM Energy signals a shift toward more predictable T&D revenue streams that could mitigate the historical lumpiness observed in the integrated PNM segment.
Based on TXNM's reported figures, operating margins have experienced sharp contractions, falling to 15.3% in 2026Q1 from a 34.6% high in 2024Q3, which may indicate that regulatory lag is currently preventing the company from fully capturing the returns on its recent capital investments in grid modernization.
The widening gap between authorized and earned returns suggests that the regulatory compact in New Mexico may be under pressure, potentially limiting the company's ability to translate rate base growth into bottom-line earnings. This trend warrants further investigation into whether current rate case settlements are sufficient to cover the rising costs of the energy transition.
According to quarterly filings, the company's high depreciation and amortization expenses, which reached $125.4 million in 2026Q1, highlight the significant capital intensity of the business, where fuel and purchased power costs often act as pass-through items that inflate the top line without contributing to sustainable earnings.
The reliance on these pass-through mechanisms suggests that while revenue may appear robust, the actual earnings power is constrained by the regulatory recovery of these costs. Any delay in the adjustment of these recovery mechanisms could create working capital strain, particularly during periods of commodity price volatility.
As indicated by the 58.1% year-over-year decline in EPS during 2026Q1, reported earnings appear highly sensitive to non-recurring items and regulatory accounting adjustments, making it difficult to discern the underlying growth rate of the core regulated business from the noise of periodic rate case settlements and asset decommissioning.
The presence of negative net income in multiple periods suggests that the company's earnings quality is currently compromised by the costs associated with the energy transition. Investors should be cautious of relying on headline EPS, as it may be obscured by the complex amortization of regulatory assets that do not reflect immediate cash generation.
Based on the provided data, the company's aggressive capital expenditure cycle appears to be driving significant asset growth, yet this has not consistently translated into incremental EPS, as evidenced by the erratic earnings performance observed over the last ten quarters of reported financial results.
The current CAPEX cycle may be focused on mandatory grid modernization and renewable integration, which are essential for long-term viability but may not provide the immediate earnings accretion expected by the market. The timing of when these assets enter the rate base remains a critical factor in determining future earnings growth.
Following the termination of the Avangrid merger, as noted in corporate disclosures, TXNM has entered a period of strategic recalibration, forcing the company to rely on its standalone regulatory framework to drive growth, which represents a fundamental shift in its long-term capital allocation and financing strategy.
This inflection point suggests that the company must now prove its ability to navigate the NMPRC independently, without the support of a larger parent entity. The success of this standalone strategy will likely depend on the company's ability to secure favorable rate outcomes that support its ongoing infrastructure investment requirements.
While the income statement shows steady revenue, it may hide significant long-term liabilities related to the decommissioning of fossil fuel assets, which are increasingly being shifted into regulatory assets that require future ratepayer recovery, a process that could become politically contentious in a rising-rate environment.
The reliance on regulatory assets to smooth earnings may mask the true economic cost of the energy transition, potentially creating a future earnings cliff if regulators become less willing to approve these recovery mechanisms. Investors should monitor the sustainability of these assets as they represent a significant portion of the company's future cash flow expectations.
Quick answers to the most common questions about buying TXNM stock.
For fiscal year 2025, TXNM Energy, Inc. (TXNM) reported total revenue of $2.17B. This represents a 48.6% increase compared to $1.46B in 2019.
TXNM Energy, Inc. (TXNM) is profitable, generating $151.4M in net income for the fiscal year ending 2025 with a net profit margin of 7.0%.
TXNM Energy, Inc. (TXNM) reported an operating income of $441.2M, resulting in an operating profit margin of 20.4%. This margin reflects the operational efficiency of the business before interest and taxes.
TXNM Energy, Inc. (TXNM) generated $824.8M in gross profit for the year, representing a gross profit margin of 38.1%. This demonstrates the company's core pricing power and production efficiency.