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Strong Buy on DTE Energy

Zacks Equity Research

On Jul 10, Zacks Investment Research upgraded DTE Energy Company (DTE) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

This electric and natural gas supplier delivered positive earnings surprises in three out of the last four quarters with an average beat of 23.90%. The long-term expected earnings growth rate for this stock is 4.69%.

The company has been performing well. Its recent decision of lowering electricity rates and maintaining reliability of service will help expand the customer base.

DTE Energy’s commitment towards the Pure Michigan Business Connect Initiative (PMBC) will help to strengthen Michigan’s economy. DTE Energy has committed to spend $1 billion with Michigan-based suppliers by 2015 to develop new business.

This, in a way, will create more opportunities for this utility service provider. Moreover, DTE Energy will invest $1.5 billion in its infrastructure and power generation assets to provide reliable and clean energy to its customers in Michigan.

The high quality services rendered by DTE Energy enable it to add large commercial and industrial customers to its customer base. The company presently supplies power to 36 such projects, of which 15 have been added in the previous year. DTE Energy has the potential to add a few more this year.

Moreover, the strong financial position enables DTE Energy to reward its shareholders through regular dividend payments. The company has increased its annual dividend rate in May to $2.62 per share, reflecting a year-over-year increase of 5.6%. The current dividend yield of 3.92% is higher than the industry average of 2.11%.  

The company expects earnings per share for 2013 in the range of $3.90 to $4.20.The Zacks Consensus Estimate for 2013 of $4.08 is above the midpoint of the guided range and reflects year-over-year growth of 3.46%.

Besides DTE Energy, other operators in the sector having a favorable Zacks Rank are Integrys Energy Group Inc. (TEG), Black Hills Corporation (BKH) and The AES Corporation (AES). All of them currently have a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on DTE

Read the Full Research Report on TEG

Read the Full Research Report on AES

Read the Full Research Report on BKH

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