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We have maintained our Neutral recommendation on Exelon Corporation (EXC - Analyst Report). The company currently has a Zacks Rank #3 (Hold).

Why the Reiteration?

The reiteration is primarily based on the company’s highly regulated operations, pending rate cases and commodity price risks. However, we consider Exelon’s strong financial position, solid utility operations, and initiatives taken to increase production through renewable sources to be the catalysts for future growth.

In first-quarter 2013, Exelon’s earnings per share and revenues surpassed the Zacks Consensus Estimates due to positive impacts from the merger with Constellation Energy, strong performances from PECO Energy and Baltimore Gas and Electric segments, and favorable weather conditions.

As of Mar 31, 2013, Exelon’s cash and cash equivalents were $0.7 billion and cash provided by operating activities during first three months of 2013 was $0.9 billion. Stable financial position enables the company to upgrade existing set ups and add new assets through organic as well as inorganic route.

The completion of the merger with Constellation has already benefited Exelon’s results. We believe this merger will subsequently boost the company’s position in terms of load and customer base. Exelon expects to garner $550 million from merger-related operations and maintenance synergies in 2015.

Recently, Exelon completed a number of organic ventures like a 69-megawatt of solar installation under its Antelope Valley Solar Ranch project, and four wind construction projects including Harvest II, Beebe, Whitetail and High Mesa. We believe these projects will allow the company to diversify and expand its generation portfolio.

Other Stocks to Consider

Other stocks from the industry that are presently performing better include Companhia Paranaense de Energia (ELP - Analyst Report) and CPFL Energia S.A. (CPL - 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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