PNM Resources’ ( PNM Quick Quote PNM - Free Report) strong fundamentals and healthy liquidity along with solid growth projections make it an attractive bet. Also, the utility’s planned capital expenditures are likely to enhance its performance. Let’s analyze the factors that make this currently Zacks Rank #2 (Buy) stock an ideal investment option. PNM Resources currently has a VGM Score of B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 or 2 offer the best upside potential. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Growth Estimate & Surprise History
The Zacks Consensus Estimate for 2020 and 2021 earnings per share is pegged at $2.27 and $2.28 each, indicating a respective 5.09% and 0.44% improvement from the corresponding year-ago reported figures.
It has a long-term (three-five years) earnings growth rate of 4.87%. PNM Resources’ trailing four-quarter earnings surprise is 9.27%, on average. Liquidity Position
PNM Resources through its multi-year revolving credit facilities, cash balances and forward equity had $1,047 million liquidity at third quarter-end, which is enough to meet its short-term obligations and fund capital investments.
Its times interest earned ratio was 3 at the end of third-quarter 2020, higher than 1.6 in fourth-quarter 2019. Such a strong ratio is indicative of the company’s adequate financial flexibility to meet its debt obligations. Strategic Moves
PNM Resources continues to invest substantially in its utility assets to provide reliable services to its customers. It plans to spend $4.1 billion during the 2020-2024 period with its focus on strengthening the transmission and distribution network, which will lead to 8.9% rate base growth.
Divestiture:PNM Resources inked a deal to sell all its outstanding shares to AVANGRID ( AGR Quick Quote AGR - Free Report) , one of the largest wind operators in the United States for $4.3 billion. The combined entity will improve the company’s credit profile with greater financial flexibility and lower cost of capital. Acquisition:In New Mexico, the utility received approvals from both FERC and the New Mexico Public Regulation Commission to acquire the Western Spirit Transmission Line in 2021. This buyout will allow the company to cater to the rising clean energy production requirement in the state. At present, in New Mexico, 1,227 MW wind projects are under construction while those with 1,328 MW are under advanced development. Return on Equity (ROE)
The utility’s ROE for the trailing 12 months is 11.03%, comparing favorably with the industry’s 8.98%. This uptrend highlights its higher efficiency in utilizing its shareholders’ funds than its peers.
The stock has rallied 18.9% against the
industry’s fall of 0.9% in the past six months. Stocks to Consider
Other utilities in focus include
Otter Tail Corporation ( OTTR Quick Quote OTTR - Free Report) and Portland General Electric Company ( POR Quick Quote POR - Free Report) , both presently carrying the same Zacks Rank as PNM Resources at present. Otter Tail delivered an earnings surprise of 9.93%, on average, in the trailing four quarters. The Zacks Consensus Estimate for 2020 earnings has been revised 1.8% upward in the past 60 days. Portland General Electric Company delivered an earnings surprise of 98.07%, on average, in the trailing four quarters. The company’s long-term (three to five years) earnings growth rate is pegged at 5.48%. These Stocks Are Poised to Soar Past the Pandemic
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