On Jun 17, 2014, the share price of Westar Energy Inc. (WR) hit a 52-week high of $36.57. Finally, the shares closed at $36.43, reflecting a year-over-year gain of 19.5%. The company had reported strong first-quarter results with a positive earnings surprise of 15.6%. Westar Energy registered earnings surprises in the last four quarters, with an average beat of 13.01%.
On May 7, Westar Energy reported first-quarter 2014 operating earnings per share of 52 cents, which exceeded the Zacks Consensus Estimate of 45 cents. Reported earnings also surpassed the 40 cents per share earned in the year-ago quarter.
Westar Energy’s upbeat first quarter results benefited from higher energy sales due to harsh winter weather and higher prices from investments in air quality control and transmission infrastructure. Based on its strong performance, management at Westar Energy increased its 2014 earnings guidance to $2.30 to $2.45 per share.
Westar Energy had already taken advantage of the favorable interest rates and refinanced some of its debts. The company is planning to refinance more debts at favorable rates. Refinancing will allow the company to use the funds for a longer period of time at a cheaper rate.
Westar Energy’s capital spending program amply reveals its plans to upgrade its existing utility assets and add new ones to its generation portfolio. Westar Energy aims at investing nearly $2.1 billion within 2014 and 2016, with $814 million planned for this year. We believe consistent capital investments will enable Westar Energy to serve more customers efficiently, thereby boosting its financial results.
A major share of Westar Energy’s power generation comes from natural gas and wind assets. This will definitely benefit the company as the Environmental Protection Agency recently proposed a rule that would lower carbon emissions from power plants by 30% by 2030 from 2005 levels.
Westar Energy currently carries a Zacks Rank #3 (Hold). Other stocks in this industry such as Entergy Corporation (ETR), NRG Energy, Inc. (NRG) and Korea Electric Power Corp. (KEP) carry a favorable Zacks Rank #1 (Strong Buy).