PNM Resources (PNM) to Benefit From Investments in Clean Assets
PNM Resources’ PNM investment in utility infrastructure and development of cost-effective power generation units will help facilitate reliable and affordable power supply. The company aims to have an emission-free generating portfolio by 2040.
However, this Zacks Rank #2 (Buy) company has to face risks related to merger delay and nuclear plant operations.
Tailwinds
PNM is also focused on organic growth. During 2023-2025, the company plans to invest $2.8 billion to further strengthen its transmission and distribution infrastructure, and improve the reliability of its operations. The capital investment plan is expected to support the earnings growth target of 8% during 2020-2025.
PNM Resources is focused on exiting coal-fired generation by 2024, replacing the production with renewable sources. It aims to achieve 80% clean energy by 2040, and reach net zero emissions by 2045, to bring renewable energy sources to its production portfolio. PNM expects to add 1,300 MW of solar and storage resources that were approved to come online by the end of 2024. This will bring its portfolio capacity to above 70% carbon free.
Headwinds
PNM Resources inked a deal to sell all its outstanding shares to AVANGRID. To successfully complete the deal, both utilities signed an amendment of the merger agreement to push the closure date to Dec 31, 2023, by the mutual consent of the companies. Also, if both companies agree, the deal may be extended by another three months. The ongoing delay in completion of the merger can lower the desired returns for the companies.
Other Stocks to Consider
Some other top-ranked stocks from the same industry are FirstEnergy Corporation FE, Portland General Electric POR and Entergy Corp. ETR, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FirstEnergy’s long-term (three to five year) earnings growth rate is 6.45%. The Zacks Consensus Estimate for FE’s 2023 earnings per share indicates an increase of 5%.
POR’s long-term earnings growth rate is 6.02%. It delivered an average earnings surprise of 4.2% in the previous four quarters.
Entergy’s long-term earnings growth rate is 5.65%. It delivered an average earnings surprise of 3.4% in the previous four quarters.
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