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Here's Why Exelon (EXC) Is Profitable for Your Portfolio

Zacks Equity Research

Earnings estimates for Exelon Corporation EXC have been revised upward in the past 90 days. The Zacks Consensus Estimate for 2019 has moved 2.3% north to $3.15.

Chicago, IL-based Exelon is a utility services holding company operating through its subsidiaries. It has businesses across 48 states and the District of Columbia in the United States along with Canada. The company has a regulating presence in every stage of the energy operation comprising power generation, competitive energy sales, transmission and delivery.

Let’s focus on the factors that make Exelon a profitable bet.

Price Appreciation: The stock has returned 15.5% in the past 12 months versus the industry’s decline of 0.5%.

Zacks Rank & Surprise History: The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Its average four-quarter positive surprise is 2.08%. The company’s long-term growth is pegged at 4.58%.

VGM Score: The stock carries an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Backtested results indicate that stocks with a favorable VGM Score of A or B coupled with a solid Zacks Rank offer the best investment bets.

Strong Cash Flow: Exelon’s strong free cash flow generation capacity will help it lower debt level by more than $3 billion in the next four years. Cash flow generation will also support organic utility growth and enable the company to increase dividend distribution rate.

Investments and Cost Savings: Exelon plans to spend nearly $21 billion over the 2018-2021 period on regulated operations to improve reliability of operations. Such systematic investments in regulated assets will drive 7.4% rate base growth during the period.

Since 2015, the company announced cost reductions of more than $900 million. Cost optimization programs and a planned closure of nuclear plants will lower operating and maintenance expenses. The company is targeting to lower operating and maintenance expenses by 3.7% during the 2018-2021 time frame.

Other Stocks to Consider

Some other top-ranked stocks from the same industry are Ameren Corp. AEE, Duke Energy Corp. DUK and Eversource Energy ES, each carrying a Zacks Rank of 2.

Ameren delivered average earnings surprise of 15.40% in the last four reported quarters. The Zacks Consensus Estimate for 2018 earnings has moved 0.9% north to $3.40 over the past 60 days.

Duke Energy pulled off average positive surprise of 3.18% in the trailing four reported quarters. The Zacks Consensus Estimate for 2018 earnings has been revised 0.4% upward to $4.74 over the past 60 days.

Eversource came up with average beat of 1.42% in the previous four reported quarters. The Zacks Consensus Estimate for 2018 earnings has inched 0.3% up to $3.27 over the past 60 days.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

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