AVANGRID (AGR) Gains From Investments Amid Merger Delay
AVANGRID Inc.’s AGR consistent investments, solid liquidity position and an expanding wind and solar generation portfolio will increase the predictability of its earnings. Strong dividend growth and buyback of shares will further increase its shareholders’ value.
However, this Zacks Rank #4 (Sell) stock is facing certain headwinds, such as delay in closure of PNM Resources’ deal, and constraints related to new projects and cyber-security risks.
Tailwinds
AVANGRID is consistently expanding its clean energy generation capacity, and adding more wind and solar sources to its portfolio. The company has an investment plan of $21.5 billion through 2025. It invested a total of $2.7 billion in 2022, with nearly 71% in its Networks segment and the rest in its Renewables segment. AGR is focused on regulated and contracted investments, which guarantee earnings and cash flows.
In March 2023, the company announced that it is going to use $30 million worth of high-quality solar trackers from the New Mexico-based company, Array Technologies (ATI), to develop a 321 Megawatt (MW) solar farm in Texas. It currently produces more than 1,250 MWs of sustainable energy in Texas through six wind farms and has a pipeline of 1,300 MWs projects.
AVANGRID has been paying dividends consistently since 2016. Its quarterly dividend stands at 44 cents per share, bringing the annual dividend to $1.76 per share. The company has a repurchase plan to maintain Iberdrola's relative ownership at 81.5%. As of Dec 31, 2022, a total of 997,983 shares were repurchased in the open market.
Headwinds
Delay in receiving the necessary regulatory approvals for PNM Resources’ merger has adversely impacted AGR’s financial position. The merger deal might get canceled as the commission might again disapprove the revised proposal.
Although the company keeps investing in development opportunities, budgetary control and timely completion of the same might not be always possible. This can have an adverse impact on the company’s financial position and its prospects.
Stocks to Consider
Some better-ranked stocks from the same industry are MGE Energy, Inc. MGEE, NiSource Inc. NI and Unitil Corporation UTL, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for MGE Energy, NiSource and Unitil’s 2023 EPS indicates an increase of 9.5%, 6.8% and 7.34%, respectively.
Long-term (three- to five-year) earnings growth of MGE Energy, NiSource and Unitil is pegged at 5.35%, 6.8% and 7.08%, respectively.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NiSource, Inc (NI) : Free Stock Analysis Report
Unitil Corporation (UTL) : Free Stock Analysis Report
MGE Energy Inc. (MGEE) : Free Stock Analysis Report
Avangrid, Inc. (AGR) : Free Stock Analysis Report
