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Xcel Energy (XEL) to Redeem 2.4% Senior Notes Worth $400M

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Xcel Energy Inc. (XEL - Free Report) announces plans to redeem all its outstanding 2.4% senior notes worth $400 million due Mar 15, 2021. The company submitted a notice to its trustee to redeem these notes on Feb 16, 2021.

The outstanding principal amount along with the accrued and unpaid interest until the redemption date will add up to the redemption price.

Debt Management

The company’s long-term debt amounted to $19,960 million as of Sep 30, 2020, increasing 14.7% from $17,407 million at 2019 end. This figure seems huge when compared to the utility’s cash and cash equivalents of $885 million. Also, its current total debt-to-total capital is 60.2%, comparing unfavorably with the industry average of 55.8%.  

However, it has liquidity worth $3.5 billion, which is sufficient to meet its near-term obligations. Also, its times interest earned ratio was 2.83 in the third quarter of 2020, marginally up from 2.82 in the second quarter. Notably, a greater than 1 ratio indicates that the company will not face problems in servicing its short-term debt obligations.

Total interest charges and financing costs in the first nine months of 2020 rose 8% from the prior-year figure to $595 million. Previous to this, in October 2020 too, Xcel Energy had submitted a redemption notice to the trustee to redeem all its outstanding 2.60% senior notes worth $300 million due Mar 15, 2022.Thus, redemption of debts will allow it to lower its capital-servicing expenses and boost its margins.

Zacks Rank & Price Performance

Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past year, shares of the company have gained 6.5% against the industry’s fall of 8.3%.

Stocks to Consider

A few better-ranked utilities are Pinnacle West Capital Corporation (PNW - Free Report) , DTE Energy Company (DTE - Free Report) and CenterPoint Energy, Inc. (CNP - Free Report) , all carrying a Zacks Rank #2 (Buy) at present.

The long-term (three to five years) earnings growth rate of Pinnacle West Capital, DTE Energy and CenterPoint Energy is pegged at 3.59%, 5.67% and 5%, respectively.

Pinnacle West Capital, DTE Energy and CenterPoint Energy delivered a respective earnings surprise of 27.15%, 10.35% and 13.22%, on average, in the last four quarters.

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