IDACORP (IDA) Rides on Investments, Diverse Customer Base
IDACORP Inc.’s IDA infrastructural investments, expanding customer base and favorable economic conditions are expected to boost its earnings.
However, this Zacks Rank #4 (Sell) stock faces risks related to compliance with regulations, weather fluctuations and high operating costs.
Tailwinds
IDACORP’s capital investment plan primarily focuses on infrastructure. The company expects a regulated capital investment of $650-$700 million during 2023. It is working on two high-voltage transmission line projects - the Boardman-to-Hemingway (B2H) and Gateway West. These projects will provide increased service reliability and mitigate transmission constraints for its customers.
The company has been able to increase customers due to improved economic conditions and its low-cost energy. The average industrial and residential rates charged by Idaho Power are much lower than the national average.
IDA aims to attain 100% clean energy by 2045. It is taking initiatives to shut down operations from all of the Jim Bridger coal-fired units by 2028 and convert Bridger Units 1 and 2 to cleaner natural gas by 2024.
Expanding operations enable IDA to generate a stable cash flow and reward shareholders. The company has raised its annual dividend by 163% since 2011 and expects to increase its annual rate by 5% or more, subject to approval. Its current dividend yield is 3.33%, higher than the Zacks S&P 500 Composite's average of 1.66%.
Headwinds
IDACORP relies majorly on hydroelectric units to provide electricity. These facilities are subject to the risks of license failures and huge costs pertaining to other regulatory processes. Risks related to delays in the completion of capital projects, interest rates, complex regulatory environment and weather fluctuations are potential headwinds for the company.
Stocks to Consider
Some better-ranked utilities in the same industry are Vistra Corp. VST, FirstEnergy Corp. FE and PNM Resources Inc. PNM. VST sports a Zacks Rank #1 (Strong Buy) while FE and PNM carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vistra’s 2023 sales indicates an improvement of 46.2% from that reported in 2022. The Zacks Consensus Estimate for 2023 earnings per share indicates an improvement of 205.8%.
FirstEnergy’s long-term (three-to five-years) earnings growth rate is 6.4%. The Zacks Consensus Estimate for 2023 sales indicates an improvement of 4.8% from that reported in 2022.
PNM Resources’ long-term earnings growth rate is 4.5%. The Zacks Consensus Estimate for 2023 sales indicates an improvement of 17.2% from that reported in 2022.
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
FirstEnergy Corporation (FE) : Free Stock Analysis Report
IDACORP, Inc. (IDA) : Free Stock Analysis Report
PNM Resources, Inc. (PNM) : Free Stock Analysis Report
Vistra Corp. (VST) : Free Stock Analysis Report
