Reasons to Add PNM Resources (PNM) to Your Portfolio Now
PNM Resources Inc. PNM is engaged in the generation, transmission and distribution of electricity. The company is poised to benefit from contributions from acquired assets and investments made in its organic assets.
Let’s explore the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The company’s long-term (three to five-year) earnings growth is pegged at 4.5%.
The Zacks Consensus Estimate for PNM’s 2023 earnings per share (EPS) is pegged at $2.72, up 0.37% in the past 60 days.
The consensus estimate for 2023 sales is pegged at $2.64 billion, indicating a year-over-year improvement of 17.2%.
The stock delivered an average earnings surprise of 21.40% in the last four quarters.
Return on Equity
Return on Equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, PNM Resources’ ROE is 10.31%, higher than the industry’s average of 9.93%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Debt Position & Liquidity
The time-to-interest earned ratio at the end of second-quarter 2023 was 2.9, which being greater than one indicates that PNM Resources is in a good position to meet its interest obligations.
PNM Resources had $528.4 million in liquidity as of Jul 28, 2023, which is enough to meet its short-term obligations.
Dividend History
The utility company has been consistently paying dividends to its shareholders. It declared a quarterly dividend of 36.75 cents per share for third-quarter 2023, which is 5.7% up from the previous year’s quarter. Currently, the annual payout stands at $1.47 per share.
PNM’s current dividend yield is 3.36%, better than the Zacks S&P 500 Composite's average of 1.71%.
Capital Investment & Clean Power Focus
PNM Resources plans to invest $2.8 billion during the 2023-2025 period to strengthen its transmission and distribution infrastructure, and improve the reliability of its operations. This will support the earnings growth target of 8% during 2020-2025.
The company plans to reach net-zero emissions by 2045. At the end of second-quarter 2023, PNM Resources had 158 megawatts (MW) of solar facilities in operation. It further plans to add 1,300 MW of solar and storage infrastructure, expected to come online by the end of 2024.
Price Performance
In the past month, shares of PNM have gained 1.6% against the broader industry’s 11.2% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are Vistra Corp. VST, sporting a Zacks Rank #1 (Strong Buy), and Avangrid Inc. AGR and ALLETE Inc. ALE, each carrying a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VST’s 2023 EPS indicates a year-over-year improvement of 220.4%. The same for sales indicates a year-over-year increase of 47.8%.
AGR’s long-term earnings growth rate is pegged at 4.1%. The Zacks Consensus Estimate for 2023 sales indicates a year-over-year increase of 6.4%.
ALE’s long-term earnings growth rate is pegged at 8.1%. The Zacks Consensus Estimate for 2023 sales indicates year-over-year growth of 23.8%.
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
Allete, Inc. (ALE) : Free Stock Analysis Report
PNM Resources, Inc. (PNM) : Free Stock Analysis Report
Avangrid, Inc. (AGR) : Free Stock Analysis Report
Vistra Corp. (VST) : Free Stock Analysis Report
