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Xcel Energy to Offer $400M Equities

Zacks Equity Research

Xcel Energy Inc. (XEL) announced that it will make equity offerings of a gross value of $400.0 million on an at-the-market basis. The company has filed a prospectus regarding this proposed equity sale. The shares offering will be presided by certain financial institutions.

Xcel Energy has a diversified portfolio of utility sources and has been occasionally involved in equity sale. The company’s last equity sale was made in 2010 when it offered 21.85 million shares at a price of $20.85 bringing the total value to $456.0 million.

The equity offerings is a part of the company’s capital investment plan for the period 2013 to 2017 to finance maturities, reduce debt, fund construction projects and acquisitions, inject equity in ancillary businesses and for general corporate purposes. The plan includes allocation of $10,150.0 million from operating cash flow, $2,045.0 million from new debt, and $400.0 million from equity as well as dividend reinvestment scheme.

Xcel Energy’s CapX2020 transmission projects and investments in wind programs are expected to drive growth in the near term. Moreover, a successful ruling in the Wisconsin electric and natural gas rate cases would further propel the company’s top line, going forward. Its dividend yield of 3.69% is higher than the industry average of 2.62% which would also help retain investor confidence in the stock.

However, several pending rate cases associated with Xcel Energy’s Colorado, Texas, North Dakota and New Mexico businesses could be an overhang on the company’s operations. Currently, Xcel Energy carries a Zacks Rank #3 (Hold).

Other partnerships which have offered units to the public for the purpose of financing debt include Buckeye Partners L.P. (BPL) and NuStar Energy L.P. (NS). Markwest Energy Partners L.P. (MWE), issued units to fund its capital expenses related to the pipeline building programs and for general partnership purposes.

Based in Minneapolis, MN, Xcel Energy, along with its subsidiaries engages in the generation, purchase, transmission, distribution and sale of electricity in the United States.

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