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4 Reasons to Add Exelon (EXC) to Your Portfolio Right Now

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Exelon Corporation’s (EXC - Free Report) systematic capital expenditure to strengthen operations, cost management, support from the Illinois legislature to continue two nuclear plants and strong cash flow make it a solid investment option in the utility space.

Let’s focus on the factors that make this Zacks Rank #1 (Strong Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Growth Projections

The Zacks Consensus Estimate for 2021 earnings per share has moved up 1.07% in the past 60 days to $2.81.

The consensus mark for 2022 earnings is pegged at $5.65 per share, up 11.3% in the past 60 days.

Surprise History and Earnings Growth

Exelon reported an earnings surprise of 27.14% in the last reported quarter.

The long-term (three to five years) earnings growth of the company is projected at 2.99%.

Regular Investments & Emission Reduction

After investing $6.5 billion in 2020 in utility operation, Exelon plans to invest nearly $27 billion over the 2021-2024 time frame in regulated utility operations for grid modernization and increase the resilience of its infrastructure for the benefit of customers. Exelon is going to invest $17.8 billion in distribution, $5.8 billion in transmission and $3.2 billion in gas main replacement in the aforesaid time frame. The systematic investments will support rate base growth of 7.6% in the 2020-2024 time period.

Exelon — through its “path to clean” goal — is planning to reduce operations-driven emissions by 50% by 2030 against a 2015 baseline and reach net-zero operations-driven emissions by 2050. Support from the Illinois legislature that allowed the company to continue the operation of Byron and Dresden nuclear plants will allow the company to produce emission-free electricity for customers in Illinois.

Efficient Cost Management

Exelon is targeting to lower operating and maintenance expenses by 1% over the 2019-2022-time frame. Given the unprecedented economic crisis caused by the COVID-19 outbreak and the unpredictable nature of recovery from this difficult period, the company — through efficient cost management — lowered costs by $400 in 2020, which was $150 million more than planned.

The company aims to offset the negative impact of adverse weather on earnings for 2021 through additional one-time cost-saving initiatives, which will continue to boost margins.

Price Performance

Over the past 12 months, the stock has returned 43.1%, outperforming the industry’s rally of 10.7%.

Zacks Investment Research
Image Source: Zacks Investment Research

Other Stocks to Consider

Other top-ranked stocks in the same sector include Otter Tail Corporation (OTTR - Free Report) , Middlesex Water Company (MSEX - Free Report) and ONE Gas Inc. (OGS - Free Report) . Otter Tail currently sports a Zack Rank #1 while the other two stocks have a Zacks Rank #2 (Buy).

Otter Tail, Middlesex Water, and ONE Gas delivered an average earnings surprise of 31.79%, 0.51%, and 6.5%, respectively, in the last four quarters.

The Zacks Consensus Estimate for 2021 earnings per share of Otter Tail, Middlesex Water,  and ONE Gas has moved up 39.2%, 3.7%, and 0.3%, respectively, in the past 60 days.