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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.

Tailwinds

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.

Headwinds

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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