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Analyst Blog

On May 22, 2013, the shares of TECO Energy Inc. (TE - Analyst Report) climbed to its 52-week high of $19.22 driven by a revival of Florida’s economy, gradual improvement in natural gas prices and chances of recovery of the coal market.

In first quarter 2013, TECO Energy’s both earnings per share and revenues surpassed the Zacks Consensus Estimates primarily owing to an increase in customer counts in Tampa Electric Company and Peoples Gas.

The economic trend continues to show positive movement in the state of Florida. The employment rate and housing market are improving gradually. The unemployment rate in Tampa Electric's service area, Hillsborough County, is lower than the present state and national levels.

In addition, the Tampa-St. Pete metropolitan area added approximately 36,000 jobs in the last year. In addition, the government issued over 4,800 single-family building permits in Tampa Electric's service territory in the last one year.

We believe the drop in the unemployment rate, housing market recovery and creation of higher number of new jobs in Florida will influence the consumers to spend more and pay the utility bills on time. These factors will subsequently fuel TECO Energy’s forthcoming performance.

To strengthen domestic operations, TECO Energy entirely discontinued its international operations and sold its unit TECO Guatemala for $227.5 million. The company intends to utilize a major part of the sale-proceeds to strengthen the assets of Tampa Electric. This initiative brings stability to TECO Energy’s operating flexibility by assuring to provide better services to the higher number of customers.

TECO Energy currently has a Zacks Rank #3 (Hold). Apart from the company, other stocks in the industry that are worth considering include CPFL Energia S.A. (CPL - Snapshot Report) and Empresa Nacional de Electricidad S.A. (EOC - Snapshot Report) with a Zacks Rank #1 (Strong Buy) and ALLETE, Inc. (ALE - Snapshot Report) with a Zacks Rank #2 (Buy).

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