On Jun 6, 2014, the shares of Exelon Corporation (EXC) hit a 52-week high of $37.73. Finally, the share price closed at $37.41, up around 23.7% from the year-ago closing. The surge in share price was driven by several factors, including systematic investment in both inorganic and organic growth projects, a stable liquidity position and a record of regular dividend payments. We believe that these positives will likely improve the company’s future performance.
Exelon follows a strategy to expand its operations through inorganic route and internal ventures. On May 30, 2014, Exelon and Pepco Holdings, Inc. (POM) filed an application with the Federal Energy Regulatory Commission for the approval of the proposed acquisition. In Apr 2014, Exelon entered into an agreement with Pepco Holdings to acquire the latter. The transaction is expected to be completed in second- or third-quarter 2015. Post acquisition, Pepco Holdings’ Atlantic City Electric, Delmarva Power and Pepco operations will add to Exelon’s portfolio. The transaction will enable Exelon expand its presence in the Mid-Atlantic region and serve more customers. Previously, Exelon completed numerous important acquisitions, including Constellation Energy and ETC ProLiance Energy.
Exelon is also currently installing smart meters and smart grids at its systems. As of Mar 31, 2014, the company’s unit, PECO Energy Company invested around $0.46 billion for installation of smart meter and roughly $0.12 billion on smart grid infrastructure. These initiatives will enable the company to provide reliable services to customers.
Exelon continues to maintain a stable liquidity position. As of Mar 31, 2014, the company’s cash balance was $0.79 billion and available fund was $8.4 billion under its committed credit facilities. Such a favorable financial position will support Exelon’s growth ventures.
Apart from pursuing a steady expansion program backed by a stable financial position, Exelon takes initiatives like payment of regular dividends to maximize shareholder wealth. In the first quarter of 2014, the company paid $0.27 billion as cash dividend.
Exelon currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the sector include NRG Energy, Inc. (NRG) and Entergy Corporation (ETR). All the stocks carry a Zacks Rank #1 (Strong Buy).
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