4 Reasons to Add Unitil (UTL) Stock to Your Portfolio Now
Unitil Corporation’s UTL strategic investments, strong dividend history and rising earnings estimates offer a great investment opportunity in the utility sector.
Let us focus on the reasons that make this Zacks Rank #2 (Buy) stock a solid investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for UTL’s 2024 earnings per share (EPS) has increased 0.34% to $2.92 in the past 60 days. The Zacks Consensus Estimate for UTL’s total revenues for 2024 stands at $579 million, indicating year-over-year growth of 3.93%.
The company’s long-term (three to five years) earnings growth is pegged at 7.08%. It delivered an average earnings surprise of 12.76% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, UTL’s ROE is 9.32% compared to its industry’s average of 8.69%. This indicates that the company has been utilizing its funds more constructively than its peers in the industry.
Solvency
At the end of the fourth quarter of 2023, UTL’s total debt to capital was 58.01%, better than the industry’s average of 61.81%.
Unitil Corporation’s times interest earned ratio (TIE) at the end of the fourth quarter of 2023 was 3. The TIE ratio of more than 1 indicates that the company will be able to meet its interest payment obligations in the near term without any problems.
Dividend History
UTL has been increasing shareholders’ value through dividend payments. In January 2024, Unitil Corporation announced a quarterly dividend of 42.5 cents per share, an increase of 3.6% from the previous level of 41 cents per share, resulting in an annual dividend of $1.7 per share. UTL’s current dividend yield is 3.31%, better than the Zacks S&P 500 composite’s yield of 1.32%.
Systematic Capital Expenditure
Strategic capital investments are making Unitil Corporation stronger and more resilient. The company invested $1.4 billion in Net Utility Plant and had a capital expenditure of $141 million in 2023.
UTL now expects its capital expenditure to be worth $168 million for 2024 and a total of $910 million for the 2024-2028 period. These systematic investments can drive its long-term rate base growth in the range of 6.5%-8.5%.
Price Performance
In the past six months, UTL shares have increased 9.5% compared to its industry’s average decline of 5.1%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are IDACORP IDA, DTE Energy DTE and Avangrid AGR, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
IDA’s long-term earnings growth rate is 4.38%. The company delivered an average earnings surprise of 12.73% in the last four quarters.
DTE’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for DTE Energy’s 2024 EPS is pegged at $6.70, which implies a year-over-year improvement of 16.9%.
AGR’s long-term earnings growth rate is 24.37%. The Zacks Consensus Estimate for Avangrid’s 2024 EPS is pegged at $2.25, which suggests year-over-year growth of 7.66%.
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