Duke Energy (NYSE:DUK) is known for its solid dividend yield of 4.30%, and the stock's performance so far this year has been strong as well. Duke shares are up around 5.5% in 2014, almost in line with the S&P 500's performance, and close to their 52-week high. The organization's last two quarterly reports have been robust, with Duke surpassing analysts' estimates on earnings. Be that as it may, will Duke have the capacity to sustain its fabulous performance going ahead? Let’s take a look.
A focused methodology is driving results
Duke Energy is focused on delivering moderate and solid services to its customers. It is leveraging it focal point, including extra capabilities gained through the merger with Progress Energy in 2012. It is focusing on delivering alluring returns to investors through long haul earnings development, as well as dividends.
Administration expects to finish its comprehensive longer-term strategies for every last bit of its 69 ash basins across all regions by the year end. Duke's plans, including the cost structure, will get upgraded and refined as designing plans are finished. Its coal facilities have permitted it to serve customers with reasonable and solid force. Presently, it is striving to deliver cautious, environment amicable, and cost compelling solutions.
- Warning! GuruFocus has detected 2 Warning Signs with DUK. Click here to check it out.
- High Yield Dividend Stocks in Gurus' Portfolio
- This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
- How to calculate the intrinsic value of a stock?
The organization is falling off a strong quarter on the once more ever top interest at Duke Energy Carolinas, and another winter top interest at Duke Energy Progress in January. Duke Energy's Midwest utilities in Indiana, Ohio, and Kentucky also set new winter peaks amid the quarter. The great climate conditions, alongside fuel value instability, highlighted Duke's capabilities for its Carolina customers. The organization's solid execution permitted it to take care of demand without much issue.
The organization is continuously focused on making its operations more effective. Till date, it has set six of the eight transmission expansion projects in service to dispense with FERC business force concerns. These projects were resolved to be set in service about whether by July 1, 2015. The staying two projects are estimated to be conveyed later this month. So, Duke is progressing in front of schedule, and this could quicken earnings development going ahead.
The organization has accepted real engineering systems, and administration has kept on focussing on last performance testing and streamlining, inside the aggregate revised undertaking estimate of $3.5 billion. Subsequently, Duke has executed well to stay inside the anticipated costs.
Moreover, Duke Energy is leaving a couple of businesses, including 6,100 megawatts of coal and gas limit serving the PJM wholesale markets, as well as Duke Energy Retail. These Midwest era assets are not a strategic fit for Duke because of the value instability in this business. Henceforth, Duke is making a smart move by disposing off assets that are not vital to its long haul development prospects.
Duke's global business, which includes 4,600 megawatts of era in Latin America, about a large portion of which comprises of hydro era in Brazil, is also progressing strongly. This business contributes somewhere around 10% and 15% of Duke Energy's earnings blend, and has been a solid performer till date. Warm era units are, no doubt used to preserve reservoir levels and take care of customer demand.
Also, Duke Energy has strategically lessened its focused on 2014 contracted percentage for its hydro era in desire of low reservoir levels and high electric interest. This strategy has helped it keep up strong results by providing for it the chance to sell power into alluring spot markets.
Likewise, Duke Energy is leading a strategic audit of the worldwide business. It's assessing development opportunities, including potential expense successful strategies, for domestic use of offshore cash with an inside timeline to finish this audit by late 2014 or early 2015.
Investments to drive future development
Duke Energy is aggressively investing in development opportunities. It's continuously and energetically pursuing various projects that are required to support its 4% to 6% earnings per share development rate, including new era, infrastructure projects, and natural and administrative consistence. It is focusing on $16 billion to $20 billion of investments focused to develop the business from 2014 through 2018.
The organization has taken some key initiatives to attain its goals. First, the South Carolina Public Service Commission issued an authentication in April permitting the organization to set up another 750 megawatt joined cycle regular gas plant at its existing W.s. Lee site in South Carolina. The plant is relied upon to enter business service by late 2017.
Second, Duke Energy got a strong response to its request for proposals for directed solar projects in North Carolina, including both PPA and ownership options. Additionally, it got proposals adding up to almost three times its objective of up to 300 megawatts of new solar limit as reported in April. The accomplishment of this objective would almost twofold its accessible solar limit in North Carolina. The selected venture is estimated to be online before the end of 2015.
Third, Duke Energy is on its track to arrange with the North Carolina Eastern Municipal Power Agency in regards to its capability to purchase their minority ownership interest in certain Duke Energy Progress plants. It also has plans for new common gas era in Florida.
All things considered, this diverse arrangement of investments supports Duke's dedication to customers and demonstrates its capability to develop and accomplish its budgetary goal.