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Duke Energy (DUK) to Gain From Investments, COVID-19 Woes Persist

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Duke Energy Corp. (DUK - Free Report) is poised to benefit from aggressive investment in solar and wind energy and expansion strategy. Yet, weather patterns in Texas and adverse impacts of COVID-19 pose threat to the stock. 

This Zacks Rank #3 (Hold) stock delivered an earnings surprise of 2.73%, on average, in the last four quarters. Its Zacks Consensus Estimate for 2021 earnings per share is pegged at $5.17.


The company focuses on expanding its scale of operations and implementing modern technologies at its facilities by investing heavily in infrastructure and expansion projects. The company is projected to invest $59 billion between 2021 and 2025. It also aims to reach its target of net-zero carbon emissions from electric generation by 2050. By 2050, renewables are projected to be Duke Energy’s largest source of energy, making up more than 40% of its generation capacity.

The company is also aggressively investing in solar and wind energy to reduce its carbon footprint. In Florida, the company is investing $1 billion in solar projects to bring 700 MW of solar online through 2022. In battery storage, the company aims to invest $600 million between 2021 and 2025, and also projects more than 13,000 MWs of energy storage on its system by 2050.


A severe winter storm in February 2021 affected certain Commercial Renewables assets of Duke Energy in Texas, which might have a financial impact on the company’s 2021 results. Moreover, the company bears a weak solvency position, with both its long-term as well as current debt significantly higher than its cash reserve, as of Mar 31, 2021.

Further, adverse economic condition caused by the COVID-19 outbreak has resulted in reduction in the demand for energy, which might negatively impact Duke Energy.

Price Performance

Duke Energy’s shares have returned 11.3% in the past six months, outperforming the industry’s 3.7% growth.

Zacks Investment ResearchImage Source: Zacks Investment Research


Stocks to Consider

Some better-ranked stocks in the same industry are Unitil Corporation. (UTL - Free Report) , Entergy Corporation (ETR - Free Report) and Hawaiian Electric Industries, Inc. (HE - 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 Unitil Corporation, Entergy Corporation and Hawaiian Electric has moved up 1.7%, 0.2%, and 8.8%, respectively, in the past 60 days.

The current dividend yield of Unitil Corporation, Entergy Corporation and Hawaiian Electric is 2.8%, 3.7% and 3.2% respectively.

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