Duke Energy Hits 52-Week High on Efficient Generation - Analyst Blog
On Jan 16, 2015, shares of Duke Energy Corporation (DUK) soared to a new 52-week high of $87.39. The stock pulled back a bit to end the trading session at $87.35. This utility giant with a market cap of around $61.78 billion has seen its shares rise roughly 29.3% in the past one year, outperforming the 9.8% gain of the S&P 500 over the same period.
What’s Driving Duke Energy Up?
The largest power provider in the U.S., Duke Energy has posted impressive numbers in recent quarters. It reported positive earnings surprises in three of the past four quarters, delivering an average beat of 3.73%.
We appreciate the company’s efforts to expand its scale of operations and modernize technologies. Duke Energy invests heavily in infrastructure and expansion projects. The company has undertaken several projects in the Carolinas and Florida, comprising about $3 billion of investments through 2018 with a capacity of about 3,000 megawatt.
In Sep 2014, the company entered into a joint venture with Dominion and AGL Resources for the construction and operation of the Atlantic Coast Pipeline. The company has also received Federal Energy Regulatory Commission or FERC approval to gain ownership of several power generating facilities from North Carolina Eastern Municipal Power Agency for about $1.2 billion. Proceeds from this transaction will enable rate reduction, thus benefiting Duke’s customers in the long term.
The company is also focused on diversifying its generation mix to include more renewables. Duke Energy has invested $7.5 billion on pollution control measures and over $9 billion in the construction of more efficient plants. These investments have reduced CO2 emissions by more than 20% from 2005 levels.
The company at the same time follows a systematic asset divestment initiative that helps it to concentrate more on its regulated businesses. Duke Energy began the process of exiting its non-regulated Midwest generation business in Feb 2014 following the refusal of the cost-based capacity request it made to the Public Utility Commission of Ohio. Duke Energy expects to complete the process of divesture by mid 2015.
Duke Energy has a stable dividend payment history distributing quarterly cash dividends for 88 consecutive years. In Dec 2014, the company paid an increased quarterly cash dividend of 79.5 cents per share. For 2014, it plans to achieve its long-term dividend payout ratio in the range of 65% to 70% of its adjusted diluted earnings per share.
Zacks Rank
Duke Energy currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the same industry include Huaneng Power International, Inc. (HNP), CMS Energy Corp. (CMS) and Consolidated Edison, Inc. (ED). While Huaneng Power holds a Zacks Rank #1 (Strong Buy), CMS Energy and Consolidated Edison carry a Zacks Rank #2 (Buy).
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CMS ENERGY (CMS): Free Stock Analysis Report
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