In the last year, the stock prices of utility companies have been on the rise. Many investors have taken advantage of utility stocks, which have provided capital appreciation along with high yield dividends. This article will examine five utility companies to determine if they could still be strong investments at their current prices.
NSTAR (NST, Financial) has a market cap of $4.84 billion with a price to earnings ratio of 18.03. The stock has traded in a 52 week range between $38.92 and $47.59. The stock is currently trading around $47. The company reported fourth quarter revenues of $677 million compared to revenues of $694 million in the fourth quarter of 2010. Fourth quarter net income was $55 million compared to net income of $46 million in the fourth quarter of 2010.
One of NSTAR’s competitors is the Northeast Utilities Company (NU, Financial). Northeast is currently trading around $36 with a market cap of $6.31 billion and a price to earnings ratio of 16.07. Northeast pays a dividend which yields 3.3% versus NSTAR whose dividend yields 3.8%.
NSTAR engages in the sale and distribution of electricity and natural gas. The company’s year-over-year fourth quarter revenues decreased by 2.5% while its net income increased by 19.5%. NSTAR has paid quarterly dividends since 1984. The company currently pays a $1.80 dividend and has increased its dividend in each of the last five years by a total of 38.4%. In the last year NSTAR’s stock price has been relatively flat, and will probably remain so until a decision is made regarding its proposed merger with Northeast Utilities. The companies filed a merger application with Connecticut’s public utility regulatory authority on January 19th, and the authority immediately issued a procedural schedule that includes a draft decision date of March 26th and a final decision date of April 2nd. NSTAR has been a solid investment with a good rate of return. The company’s stock price has increased by 65% over the last three years.
Consolidated Edison (ED, Financial) has a market cap of $17.02 billion with a price to earnings ratio of 16.27. The stock has traded in a 52 week range between $48.85 and $62.74. The stock is currently trading around $58. The company reported fourth quarter revenues of $2.9 billion compared to revenues of $3.1 billion in the fourth quarter of 2010. Fourth quarter net income was $193 million compared to net income of $236 million in the fourth quarter of 2010.
One of Consolidated’s competitors is the American Electric Power Company (AEP, Financial). American Electric is currently trading around $38 with a market cap of $11.4 billion and a price to earnings ratio of 9.36. American Electric pays a dividend which yields 4.9% versus Consolidated whose dividend yields 4.1%.
Consolidated distributes electricity and natural gas in New York City and its neighboring counties. In the fourth quarter, the company’s revenues decreased by 6.8% and its net income decreased by 22%. The company’s 2011 fourth quarter earnings were lower because of the unusually mild winter weather. The company had earnings per share of $3.59 in 2011 versus its projected 2012 earnings of between $3.65 and $3.85 per share. Consolidated currently pays a $2.42 dividend and has increased its annual dividend in each of the last thirty eight years. Investors like Consolidated’s steady earnings and dividends, and have bid the stock price up by 17% over the last 52 weeks and 86% over the last three years. Despite the run up in the stock price, the valuations (price to earnings ratio 16.27/price to book ratio 1.49) are not high. Consolidated offers investors the potential for capital appreciation along with a generous dividend.
Exelon (EXC, Financial) has a market cap of $25.93 billion with a price to earnings ratio of 10.42. The stock has traded in a 52 week range between $38.57 and $45.45. The stock is currently trading around $39. The company reported fourth quarter revenues of $4 billion compared to revenues of $4.4 billion in the fourth quarter of 2010. Fourth quarter net income was $606 million compared to net income of $524 million in the fourth quarter of 2010.
One of Exelon’s competitors is PPL Corporation (PPL, Financial). PPL is currently trading around $29 with a market cap of $16.51 billion and a price to earnings ratio of 10.91. PPL pays a dividend which yields 5% versus Exelon whose dividend yields 5.4%.
Exelon is an electrical utility company that operates in Northern Illinois and southeastern Pennsylvania. Exelon is the largest operator of nuclear power plants in the United States. The company has paid quarterly dividends for decades and currently pays a dividend of $2.10. The company’s fourth quarter year-over-year revenues decreased by 10%, but its net income increased by 15%. In 2011, Exelon’s earnings were $3.76 per share. The company’s projected earnings per share for 2012 is $3.04, and for 2013 earnings are projected to be $2.86 per share. The reason for the lower earnings is because “Nuclear power is now competing even with Natural Gas as a baseload generation, with the cost of natural gas at a 10 year low.” The result is that Exelon must now sell electricity at lower per megawatt prices. These lower earnings projections have hurt the company’s stock price which is down, by 5.2%over the last 52 weeks and 4.6% over the last three years. The stock price may also have been affected by the nuclear power plant meltdowns in Japan. Exelon offers little potential for capital appreciation, and I cannot recommend the stock at this time.
Duke Energy (DUK, Financial) Duke has a market cap of $27.95 billion with a price to earnings ratio of 16.33. The stock has traded in a 52 week range between $16.87 and $22.12. The stock is currently trading around $21. The company reported fourth quarter revenues of $3.3 billion compared to revenues of $3.4 billion in the fourth quarter of 2010. Fourth quarter net income was $288 million compared to net income of $427 million in the fourth quarter of 2010.
One of Duke’s competitors is Progress Energy Inc. (PGN, Financial). Progress is currently trading around $53 with a market cap of $15.66 billion and a price to earnings ratio of 27.32. Progress pays a dividend which yields 4.6% versus Duke whose dividend yields 4.8%.
Duke is a utility company that sells and distributes electricity and natural gas. Duke currently pays a dividend of $1.00 per share and has increased its dividend in each of the last five years by a total of 19%. In the fourth quarter, the company’s revenues decreased by 3% and its net income decreased by 6.7%. Like most other US utility companies, Duke’s fourth quarter earnings were lower because of the mild winter weather. Despite reduced year-over-year earnings, the fourth quarter earnings $0.24 per share exceeded expectations by $0.03. Duke’s CEO James Rogers when speaking of 2012 targeted an “adjusted diluted EPS outlook range of $1.40 to $1.45 on a stand-alone basis.” This rate of earnings would support their long-term projected growth rate of 4% to 6%. Duke has been a strong long term investment, and along with its high yield dividend its stock price has increased by 15.7% over the last 52 weeks and 83.5% over the last three years.
Southern Company (SO, Financial) Southern has a market cap of $38.29 billion with a price to earnings ratio of $17.33. The stock has traded in a 52 week range between $35.73 and $46.69. The stock is currently trading around $44. The company reported fourth quarter revenues of $3.7 billion compared to revenues of $3.8 billion in the fourth quarter of 2010. Fourth quarter net income was $277 million compared to net income of $169 million in the fourth quarter of 2010.
One of Southern’s competitors is Next Era Energy (NEE, Financial). Next Era is currently trading around $60 with a market cap of $24.93 billion and a price to earnings ratio of 12.97. Next Era pays a dividend which yields 4% versus Southern whose dividend yields 4.3%.
Southern is an electric utility company that operates in the southeast portion of the US. Southern currently pays a dividend of $1.89 per share and has increased its dividend in each of the last five years by a total of 22%. The company’s fourth quarter year-over-year revenues decreased by 2% and its net income increased by 63%. The company’s fourth quarter earnings of $0.30 per share was a 66.7% increase from 2010. The company’s CFO Art Beattie gave reasons for the earnings increase, which included increased industrial demand and higher energy margins because of record low natural gas prices. Southern has provided a good return for its investors, and in addition to its dividend the stock price has increased by 15.6% over the last 52 weeks and 69.5% over the last three years. If natural gas prices stay low, Southern should continue to grow earnings.
NSTAR (NST, Financial) has a market cap of $4.84 billion with a price to earnings ratio of 18.03. The stock has traded in a 52 week range between $38.92 and $47.59. The stock is currently trading around $47. The company reported fourth quarter revenues of $677 million compared to revenues of $694 million in the fourth quarter of 2010. Fourth quarter net income was $55 million compared to net income of $46 million in the fourth quarter of 2010.
One of NSTAR’s competitors is the Northeast Utilities Company (NU, Financial). Northeast is currently trading around $36 with a market cap of $6.31 billion and a price to earnings ratio of 16.07. Northeast pays a dividend which yields 3.3% versus NSTAR whose dividend yields 3.8%.
NSTAR engages in the sale and distribution of electricity and natural gas. The company’s year-over-year fourth quarter revenues decreased by 2.5% while its net income increased by 19.5%. NSTAR has paid quarterly dividends since 1984. The company currently pays a $1.80 dividend and has increased its dividend in each of the last five years by a total of 38.4%. In the last year NSTAR’s stock price has been relatively flat, and will probably remain so until a decision is made regarding its proposed merger with Northeast Utilities. The companies filed a merger application with Connecticut’s public utility regulatory authority on January 19th, and the authority immediately issued a procedural schedule that includes a draft decision date of March 26th and a final decision date of April 2nd. NSTAR has been a solid investment with a good rate of return. The company’s stock price has increased by 65% over the last three years.
Consolidated Edison (ED, Financial) has a market cap of $17.02 billion with a price to earnings ratio of 16.27. The stock has traded in a 52 week range between $48.85 and $62.74. The stock is currently trading around $58. The company reported fourth quarter revenues of $2.9 billion compared to revenues of $3.1 billion in the fourth quarter of 2010. Fourth quarter net income was $193 million compared to net income of $236 million in the fourth quarter of 2010.
One of Consolidated’s competitors is the American Electric Power Company (AEP, Financial). American Electric is currently trading around $38 with a market cap of $11.4 billion and a price to earnings ratio of 9.36. American Electric pays a dividend which yields 4.9% versus Consolidated whose dividend yields 4.1%.
Consolidated distributes electricity and natural gas in New York City and its neighboring counties. In the fourth quarter, the company’s revenues decreased by 6.8% and its net income decreased by 22%. The company’s 2011 fourth quarter earnings were lower because of the unusually mild winter weather. The company had earnings per share of $3.59 in 2011 versus its projected 2012 earnings of between $3.65 and $3.85 per share. Consolidated currently pays a $2.42 dividend and has increased its annual dividend in each of the last thirty eight years. Investors like Consolidated’s steady earnings and dividends, and have bid the stock price up by 17% over the last 52 weeks and 86% over the last three years. Despite the run up in the stock price, the valuations (price to earnings ratio 16.27/price to book ratio 1.49) are not high. Consolidated offers investors the potential for capital appreciation along with a generous dividend.
Exelon (EXC, Financial) has a market cap of $25.93 billion with a price to earnings ratio of 10.42. The stock has traded in a 52 week range between $38.57 and $45.45. The stock is currently trading around $39. The company reported fourth quarter revenues of $4 billion compared to revenues of $4.4 billion in the fourth quarter of 2010. Fourth quarter net income was $606 million compared to net income of $524 million in the fourth quarter of 2010.
One of Exelon’s competitors is PPL Corporation (PPL, Financial). PPL is currently trading around $29 with a market cap of $16.51 billion and a price to earnings ratio of 10.91. PPL pays a dividend which yields 5% versus Exelon whose dividend yields 5.4%.
Exelon is an electrical utility company that operates in Northern Illinois and southeastern Pennsylvania. Exelon is the largest operator of nuclear power plants in the United States. The company has paid quarterly dividends for decades and currently pays a dividend of $2.10. The company’s fourth quarter year-over-year revenues decreased by 10%, but its net income increased by 15%. In 2011, Exelon’s earnings were $3.76 per share. The company’s projected earnings per share for 2012 is $3.04, and for 2013 earnings are projected to be $2.86 per share. The reason for the lower earnings is because “Nuclear power is now competing even with Natural Gas as a baseload generation, with the cost of natural gas at a 10 year low.” The result is that Exelon must now sell electricity at lower per megawatt prices. These lower earnings projections have hurt the company’s stock price which is down, by 5.2%over the last 52 weeks and 4.6% over the last three years. The stock price may also have been affected by the nuclear power plant meltdowns in Japan. Exelon offers little potential for capital appreciation, and I cannot recommend the stock at this time.
Duke Energy (DUK, Financial) Duke has a market cap of $27.95 billion with a price to earnings ratio of 16.33. The stock has traded in a 52 week range between $16.87 and $22.12. The stock is currently trading around $21. The company reported fourth quarter revenues of $3.3 billion compared to revenues of $3.4 billion in the fourth quarter of 2010. Fourth quarter net income was $288 million compared to net income of $427 million in the fourth quarter of 2010.
One of Duke’s competitors is Progress Energy Inc. (PGN, Financial). Progress is currently trading around $53 with a market cap of $15.66 billion and a price to earnings ratio of 27.32. Progress pays a dividend which yields 4.6% versus Duke whose dividend yields 4.8%.
Duke is a utility company that sells and distributes electricity and natural gas. Duke currently pays a dividend of $1.00 per share and has increased its dividend in each of the last five years by a total of 19%. In the fourth quarter, the company’s revenues decreased by 3% and its net income decreased by 6.7%. Like most other US utility companies, Duke’s fourth quarter earnings were lower because of the mild winter weather. Despite reduced year-over-year earnings, the fourth quarter earnings $0.24 per share exceeded expectations by $0.03. Duke’s CEO James Rogers when speaking of 2012 targeted an “adjusted diluted EPS outlook range of $1.40 to $1.45 on a stand-alone basis.” This rate of earnings would support their long-term projected growth rate of 4% to 6%. Duke has been a strong long term investment, and along with its high yield dividend its stock price has increased by 15.7% over the last 52 weeks and 83.5% over the last three years.
Southern Company (SO, Financial) Southern has a market cap of $38.29 billion with a price to earnings ratio of $17.33. The stock has traded in a 52 week range between $35.73 and $46.69. The stock is currently trading around $44. The company reported fourth quarter revenues of $3.7 billion compared to revenues of $3.8 billion in the fourth quarter of 2010. Fourth quarter net income was $277 million compared to net income of $169 million in the fourth quarter of 2010.
One of Southern’s competitors is Next Era Energy (NEE, Financial). Next Era is currently trading around $60 with a market cap of $24.93 billion and a price to earnings ratio of 12.97. Next Era pays a dividend which yields 4% versus Southern whose dividend yields 4.3%.
Southern is an electric utility company that operates in the southeast portion of the US. Southern currently pays a dividend of $1.89 per share and has increased its dividend in each of the last five years by a total of 22%. The company’s fourth quarter year-over-year revenues decreased by 2% and its net income increased by 63%. The company’s fourth quarter earnings of $0.30 per share was a 66.7% increase from 2010. The company’s CFO Art Beattie gave reasons for the earnings increase, which included increased industrial demand and higher energy margins because of record low natural gas prices. Southern has provided a good return for its investors, and in addition to its dividend the stock price has increased by 15.6% over the last 52 weeks and 69.5% over the last three years. If natural gas prices stay low, Southern should continue to grow earnings.
