On Apr 12, 2013, the shares of Northeast Utilities (NU) climbed to its 52-week high of $44.74 driven by its strong projects pipeline and diversified asset base. We expect the company’s long-term earnings growth to be 7.55%.
As announced in Feb 2013, Northeast Utilities intends to invest around $1.6 billion in 2013 to upgrade the electricity and natural gas infrastructure. Currently, the company is in the middle of several major projects including Greater Springfield Reliability Project, Interstate Reliability Project and Northern Pass Project. These initiatives will enable the company to increase the transmission capacity, which will subsequently help to meet the rise in customers’ demand.
In Apr 2012, Northeast Utilities completed its merger with NSTAR and enjoyed related benefits in fourth quarter 2012. Quarterly revenues surpassed the prior-year results due to strong performance by the transmission segment primarily backed by this merger. We believe this merger will aid the company to increase its scale of operations and serve a wider customer base in the future.
As of Dec 31, 2012, Northeast Utilities had $45.7 million in cash and $1.45 billion available under its revolving credit facilities. This financial position enables the company to pursue steady inorganic as well as organic growth strategies.
Northeast Utilities expects a steady performance in 2013. The company’s earnings guidance for full year 2013 is $2.40 to $2.60 per share. The Zacks Consensus Estimates for full year 2013 and 2014 is $2.55 and 2.71 per share, up 12.06% and 6.18% year over year, respectively.
In Feb 2013, the board of directors of Northeast Utilities increased its quarterly dividend by 7.1% to 36.75 cents per share. The company has been boosting its investors’ income by hiking the dividend payment consistently since 1966. The company’s practice of raising dividends from time to time will benefit the stock as it attracts investor attention.
Northeast Utilities currently has a Zacks Rank #2 (Buy). Besides Northeast Utilities, other stocks from the industry that are performing well include Brookfield Infrastructure Partners L.P. (BIP), Empresa Nacional de Electricidad S.A. (EOC) and Pike Electric Corporation (PIKE). All the three stocks carry a Zacks Rank #1 (Strong Buy).
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