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Strong Buy on COPEL

Zacks Equity Research

Zacks Investment Research upgraded Companhia Paranaense de Energia (ELP), also known as COPEL to a Zacks Rank #1 (Strong Buy) on May 28, 2013.

Why the Upgrade?

COPEL reported impressive financial results for the first quarter of 2013 on May 16. The company’s net income rose 24.7% year over year while its earnings per ADR came in at US$0.73. The results point toward an increase over US$0.66 per ADR reported in the year-ago quarter and the Zacks Consensus Estimate of US$0.72 per ADR.

Revenue, as reported by COPEL, rose 17.6% on the back of improvements witnessed in all categories of business. Talking of expenses, operating costs and expenses soared 19.1% in the quarter. EBITDA margin settled at 27.9%, lower than 29.7% reported in the year-ago quarter.

Management of COPEL is keen on making serious efforts to improve its generation capabilities and improve its services. For 2013, the company has allocated approximately $1,922.8 million toward Generation and Transmission, Distribution as well as Telecommunications.

The solid financial performance as well as optimistic guidance induced an upward revision in the earnings estimate for COPEL. The Zacks Consensus Estimate in the last 30 days has gone up by 146% to $2.46 for 2014 and plummeted slightly by 0.9% to $2.13 for 2013.

Also, COPEL has a positive average earnings surprise of 54.2% considering the last four trailing quarters. For the year 2013, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +5.6%.

Other Stocks to Consider  

COPEL is a fully integrated electric utility of Brazil engaged in the generation, transmission, and distribution of electricity to the State of Paraná. The stock currently has a market capitalization of $4.8 billion.

Other stocks to watch out for in the industry are CPFL Energia S.A. (CPL), with a Zacks Rank #1 (Strong Buy) while ALLETE, Inc. (ALE) and American Electric Power Co., Inc. (AEP), each holds a Zacks Rank #2 (Buy).

Read the Full Research Report on AEP

Read the Full Research Report on ELP

Read the Full Research Report on CPL

Read the Full Research Report on ALE

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