Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

We are maintaining our Neutral recommendation on Northeast Utilities (NU - Analyst Report). The company currently has a Zacks Rank #2 (Buy).

Why the Reiteration?

The reiteration is primarily based on risks associated with Northeast Utilities’ over-reliance on transmission and distribution businesses, delay in several important projects, and stringent regulations. However, we consider the company’s diversified asset base and solid project pipeline as catalysts, which can mitigate these negatives.

The performance of utility providers like Northeast Utilities primarily depends on their ability to manage their transmission and distribution businesses. Northeast Utilities’ regulated businesses contributed substantially to its total earnings in 2012. Transmission and distribution businesses sometimes face several operational risks including breakdown and failure or damage of equipments or processes, which affect the company’s operations and increase operating costs.

On the positive side, Northeast Utilities completed its merger with NSTAR in Apr 2012 and enjoyed related benefits in the fourth quarter of 2012. The company’s quarterly revenues surpassed the year-ago figure on the back of strong performance from its transmission segment primarily driven by this merger. We believe that the NSTAR-merger will allow Northeast Utilities to increase its scale of operations and widen customer base.

As far as organic growth strategies are concerned, Northeast Utilities invested $1.47 billion in 2012 under the infrastructure spending program for its several expansion and development projects. These initiatives will allow the company to increase its transmission capacity, which will subsequently help to meet rising demand. Later, this will provide the company attractive earnings and cash flow over the couple of years.

Over the past two months, the Zacks Consensus Estimate for first-quarter 2013 increased 1.6% to 65 cents per share. The Zacks Consensus Estimate for full-year 2013 earnings currently stands at $2.55 per share, up 12.06% year over year primarily attributable to lower interest costs and operating and maintenance expenses.

Other Stocks to Consider

Other stocks from the industry that are presently performing better include Brookfield Infrastructure Partners L.P. (BIP - Snapshot Report), Empresa Nacional de Electricidad S.A. (EOC - Snapshot Report) and Pike Electric Corporation (PIKE - Snapshot Report). All the three stocks carry a Zacks Rank #1 (Strong 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

Learn more

Start for as little as $4.50 per trade.

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
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%