Back to top

Analyst Blog

On Sep 25, 2013, Zacks Investment Research downgraded electric utility Calpine Corporation (CPN - Snapshot Report) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Calpine continues to disappoint market expectation, falling short of the Zacks Consensus Estimate in the last three quarters with an average earnings miss of 235.6%. The uninspiring performance has led to downward estimate revisions.

On Jul 25, Calpine reported second-quarter loss per share of 8 cents, widely missing the Zacks Consensus Estimate of earnings of 8 cents by 200%. The company’s third quarter results slated to be released on Nov 5 do not look promising either in the light of recent trends.

In the second quarter, Calpine registered a year-over-year decline in commodity margin in all its services territories. The softer results were primarily due to lower generation output resulting from milder weather and a reversal of coal-to-gas switching in the wake of higher natural gas prices.

Calpine smarting under weak financial results is undertaking a number of initiatives. In Aug 2013, the company started operating two combined-cycle natural gas-fired power generation plants, which together have a generation capacity of more than 900 megawatts. However, it appears that Calpine will have to take more proactive measures to turn the tide. Long-term sales growth is presently pegged at -9.86%.

The Zacks Consensus Estimate for 2013 decreased 13.2% in the last 60 days to 53 cents per share. For 2014, the Zacks Consensus Estimate decreased 8.3% in the last 60 days to 84 cents per share.

Not all electric utilities are performing as poorly as Calpine Corporation. Other utility stocks performing well, with a favorable Zacks Rank, are UNS Energy Corporation , The AES Corporation (AES - Analyst Report) and Brookfield Infrastructure Partners L.P. (BIP - Snapshot Report). UNS Energy has a Zacks Rank #1 (Strong Buy) while AES Corporation and Brookfield Infrastructure Partners retain a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%
AROTECH COR… ARTX 3.78 +5.59%