Could someone comment on this latest drop in the TE share price ? Is it related to '09 coal prices ? Are there other reasons not yet made public ? Opinions would be appreciated.
TE is influenced by coal prices, which trend with oil price. So, as oil prices drop, so does coal and hence the outlook for TE (price per BTU is the industry measure re coal vs oil). As others have stated, the Florida economy is weak; the thing to watch is population growth trends...remember, warm winter weather is primary motivation for in-migration from north locations. Long term population growth needed for long term investment thesis to hold. In last 2 weeks several brokerages have downgraded TE and the entire utility industry. Concern is that revenues will fall due to economy, both from households watching there spending and industry/commerce; no doubt the sharp slowdown in October-December is affecting utilities. Unfortunately, TE is in a down cycle that will likely test prior lows.
If you like coal take a look at PVR which also owns NG and timber properties along with some of the best Appalachian coal assets in the USA and distributes nice distributions to shareholders . It is a LP though with extra paperwork each year . PVA is the parent company PVG is the incentive rights benefactor . PVR is well off its highs . I heard opinions that Obamma likes renewable energy not coal for CTL/G coal to liquid / gas or nucleaer . However we defn need both as the US has huge supplies of coal . Anything to keep our dollars at home not overseas lowering the worth of the dollar as we have to buy they back while now in a Service economy not a manafacturing one like China who has experianced a industrial rebirth and now holds the newest factories and infrastructure buildouts like the Middle East and select parts of Asia and other developing countries left over from this latest World wide bull market .
I would aquire TE on days of pronounced weakness overtime . I like PGN even more in this area . AEP is winner . ETR has been one of the strongest Utillities of the past decade and will remain a force in the USA . TE has a very unique LNG terminal being built . PGN has Crystal River a Nuclear project . ETR is just the fastst growing Utillity with major nuclear componants in the USA .
A rebound in TE's coal business in '09? From today's Kiplinger's Letter . . ."Coal is likely to be a big winner under the Obama administration.
Look for Congress to provide several billion dollars in investments
to develop ways to transform coal into a fuel for autos, trucks and aircraft,
with reduced levels of carbon dioxide emissions. It’ll be part of the big push
to develop alternative energy sources. Within 20 years or so, plants in the U.S.
will make up to 3 million barrels a day of chemically equivalent gas and diesel fuel.
That’s enough to meet 15% of usage at current levels and would temper oil prices."
<< Coal is likely to be a big winner under the Obama administration. >>
What moron published that? Kiplinger?
<< Look for Congress to provide several billion dollars in investments to develop ways to transform coal into a fuel for autos, trucks and aircraft, with reduced levels of carbon dioxide emissions. It’ll be part of the big push
to develop alternative energy sources. >>
How'd that work out in the stimulus bill?
In any case, this is not going to make a difference for a decade.
My comment would be that our company is run by inefficient management and Directors who are highly overpaid for the results they achieve. This used to be a "growth" company. It's now growing in the wrong direction, and I don't think management or the directors care.
They were recently downgraded by Keyblanc to Hold. I believe they own their own coal mines, in any event they have received approval to raise the rates. No one can figure the current economy, lot of foreclosures in their service area. I don't think it is too bad a buy at current prices. But who knows where this economy is going in the short run. Since it primarily serves homes, I would hope they will be ok.
That is my guess...as they have had the long term coal contracts locked up for i think the last 5-years. Currently the floor for all types of coal-has literally dropped below the floor, so to speak. I do not imaging the company TECO would like to 'lock-in' at anywhere near these awful and severely depressed prices. The TECO dividend has been lowered and lowered and slightly raised over the last 5-10 years....however the area where this company operated is under a severe economic strain but keep in mind that more and more folks just keep on movin' to Florida...so we should eventually work our way out of this bad time. But remember the new coal contracts had been expected to add .35 to .65 cents per shares the first year and almost another .75 cents to $1.25 per share incrementally over the next 5 years...niow all thats - out the window...i have not seen new earnings prospects also i do not know what TE's current capital requirements are at this time...also the company is in a fairly ambitious expansion of coal fired plants also...could be very dicey...proceed with caution...the dividend here is not at all assured over time with earnings and divvy so close to each other....proceed with extreme caution...
Much better names would surely include:
ED- Con Ed of New Your
AEP- American Electric Power
So- Southern Company
-to mention and name but a few.