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Xcel Energy (XEL) Rides on Renewable Expansion, Investment
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Xcel Energy Inc.’s (XEL - Free Report) investments in infrastructure projects, focus on renewable expansion, strengthening rate base and consistent customer base growth will boost its earnings performance. XEL is also focused on reducing coal. The company’s dividend hike makes it an attractive option for investors.
However, this Zacks Rank #2 (Buy) stock has to face risks due to price fluctuations, failure of transmission and distribution lines.
Tailwinds
Xcel Energy aims to spend $29.5 billion during the 2023-2027 time period, which excludes $2-$4 billion of potential incremental investment opportunities planned in the same time frame. These investments are aimed to strengthen and expand the company’s transmission, distribution, electric generation and renewable projects.
Xcel Energy aims to increase shareholder value by a 5-7% dividend rate hike, annually. Recently, its board of directors had increased dividends for 19th consecutive year. This resulted in an annual dividend of $2.08 per share for 2023, indicating a 6.7% increase from the previous year's figure.
Xcel Energy is focusing on clean-energy transition. After completing six wind projects with 1,500 MW capacities in 2020, the company completed four wind farms, adding another 800 MW of clean energy generation capacity to its portfolio. The company's total wind capacity is 11,000 MW, out of which 4,500 MW is from owned wind farms. Xcel Energy’s high-quality wind farms lowered emission and generated nearly $3 billion of fuel-related customer savings and PTCs since 2017.
Xcel Energy targets to lower emissions by at least 80% by 2030. It also plans to add new projects to achieve its goal of carbon neutrality by 2050.
Headwinds
Xcel Energy’s risks related to commodity price fluctuations, rising interest rates, failure of transmission and distribution lines, along with strict environmental legislations, are headwinds for the company.
The profitability of Xcel Energy’s operations is based on the ability to recover energy providing and utility services cost, and earn a return on capital investment. The company’s interest charges and financing costs increased to $925 million in 2022 from $816 million in 2021. Delay in collection of fuel cost recoveries could impact Xcel Energy’s cash flows and liquidity.
The Zacks Consensus Estimate for Ameren Corporation, CenterPoint Energy and NiSource’s 2023 EPS indicates increases of 5.1%, 7.97% and 6.12%, respectively.
Long-term (three- to five-year) earnings growth of Ameren Corporation, CenterPoint Energy and NiSource is pegged at 6.86%, 6% and 6.8%, respectively.
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Xcel Energy (XEL) Rides on Renewable Expansion, Investment
Xcel Energy Inc.’s (XEL - Free Report) investments in infrastructure projects, focus on renewable expansion, strengthening rate base and consistent customer base growth will boost its earnings performance. XEL is also focused on reducing coal. The company’s dividend hike makes it an attractive option for investors.
However, this Zacks Rank #2 (Buy) stock has to face risks due to price fluctuations, failure of transmission and distribution lines.
Tailwinds
Xcel Energy aims to spend $29.5 billion during the 2023-2027 time period, which excludes $2-$4 billion of potential incremental investment opportunities planned in the same time frame. These investments are aimed to strengthen and expand the company’s transmission, distribution, electric generation and renewable projects.
Xcel Energy aims to increase shareholder value by a 5-7% dividend rate hike, annually. Recently, its board of directors had increased dividends for 19th consecutive year. This resulted in an annual dividend of $2.08 per share for 2023, indicating a 6.7% increase from the previous year's figure.
Xcel Energy is focusing on clean-energy transition. After completing six wind projects with 1,500 MW capacities in 2020, the company completed four wind farms, adding another 800 MW of clean energy generation capacity to its portfolio. The company's total wind capacity is 11,000 MW, out of which 4,500 MW is from owned wind farms. Xcel Energy’s high-quality wind farms lowered emission and generated nearly $3 billion of fuel-related customer savings and PTCs since 2017.
Xcel Energy targets to lower emissions by at least 80% by 2030. It also plans to add new projects to achieve its goal of carbon neutrality by 2050.
Headwinds
Xcel Energy’s risks related to commodity price fluctuations, rising interest rates, failure of transmission and distribution lines, along with strict environmental legislations, are headwinds for the company.
The profitability of Xcel Energy’s operations is based on the ability to recover energy providing and utility services cost, and earn a return on capital investment. The company’s interest charges and financing costs increased to $925 million in 2022 from $816 million in 2021. Delay in collection of fuel cost recoveries could impact Xcel Energy’s cash flows and liquidity.
Other Stocks to Consider
Some other top-ranked stocks from the same industry are Ameren Corporation (AEE - Free Report) , CenterPoint Energy, Inc. (CNP - Free Report) and NiSource Inc. (NI - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Ameren Corporation, CenterPoint Energy and NiSource’s 2023 EPS indicates increases of 5.1%, 7.97% and 6.12%, respectively.
Long-term (three- to five-year) earnings growth of Ameren Corporation, CenterPoint Energy and NiSource is pegged at 6.86%, 6% and 6.8%, respectively.