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Organic Investments and Cost Management Aid Exelon (EXC)

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Exelon Corporation (EXC - Free Report) is poised to benefit from organic investments, cost management and the hedging program, which involves safeguarding of commodity risks for expected generation.

This Zacks Rank #3 (Hold) stock delivered an average earnings surprise in the last four quarters. Its Zacks Consensus Estimate for 2021 earnings per share has moved 1.7% upward to $2.99 in the past 60 days.

Tailwinds

Exelon substantially invests in infrastructure projects, in addition to expanding renewable and fossil fuel generating capacity. After investing $22 billion in the last four years, the frequency of outages has been reduced by 47% at ComEd and 22% at BGE since 2012. PHI has reduced frequency of outages by 30% since the merger. Exelon plans to invest nearly $26 billion over the 2020-2023 time frame in regulated operations. This is intended to further improve the reliability of its operations.

Since 2015, Exelon has announced more than $900M of cost reductions that has benefited customers. Its ongoing cost-saving initiatives will further benefit customers going forward. Exelon is targeting to lower operating and maintenance expenses by 1% over the 2019-2022 time frame.

The company recognizes the importance of zero-carbon electricity generation and is resolutely working its way toward achieving that target. Despite having the lowest carbon-intensive generation portfolio among the current large producers of electricity in the United States, Exelon has set a goal for an additional 15% reduction of greenhouse gas emissions from internal operations.

Headwinds

Exelon utilizes nuclear fuel to produce a significant portion of electricity. In spite of the safety initiatives taken at its nuclear plants, unplanned outages are a concern. Exelon’s operations could be negatively impacted by possible Nuclear Regulatory Commission actions, which in turn might affect the profitability of its nuclear generating fleet.

Exelon’s generation and energy delivery businesses are highly regulated, and could be subject to regulatory and legislative actions that adversely affect operations or financial results.

Price Performance

Exelon’s shares have returned 8.4% in the past six months, outperforming the industry’s 3.7% growth.

Stocks to Consider

Some better-ranked stocks in the same industry include Pinnacle West Capital Corporation (PNW - Free Report) , Portland General Electric Company (POR - Free Report) and PPL Corporation (PPL - Free Report) , each currently having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for 2021 earnings per share for Pinnacle West Capital, Portland General Electric and PPL Corp. has moved up 1.2%, 2.7%, and 5.8%, respectively, in the past 60 days.

The current dividend yield of Pinnacle West Capital, Portland General Electric and PPL Corp. is 4.16%, 3.92% and 5.91% respectively, better than the industry yield of 3.3%.

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