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IDACORP (IDA) to Gain From Investments & Cost Management
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IDACORP, Inc.’s (IDA - Free Report) long-term investment plans to fortify its infrastructure, improvement in its service territories’ economic conditions and customer growth will boost its earnings. The company’s interest in transmission projects and debt management will further drive its performance.
However, this Zacks Rank #4 (Sell) stock faces risks due to strict licensing process, which may result in increased expenses and interest rates.
Tailwinds
IDACORP’s cost management and focus on producing more electricity from clean sources are expected to benefit its earnings. The company expects a capex of $3.3 billion for the 2023-2027 period, primarily due to its reliability-focused projects. Its regulated electric operations in Idaho generate a relatively stable and growing income stream. In 2022, Idaho Power’s customer base improved 2.4%. Our model estimates customer volume to increase annually in the 2023-2025 period, courtesy of improving economic condition in IDA’s service territories.
IDACORP is rewarding shareholders through dividend hikes. In 2022, IDACORP and Idaho Power paid dividends worth $154 million and $114 million, respectively. Since 2011, the company has raised its annual dividend by 163% to $3.16 per share.
Consistent focus on cost control has enabled the company to keep its rates lower than other suppliers of electricity. The average industrial and residential rates charged by Idaho Power are much lower than the national average. Our model predicts a year-over-year increase in operating income of 1.4% and 6% in 2023 and 2024, respectively.
IDACORP is involved in the Boardman-to-Hemingway (B2H) project — a 300-mile, 500-kilovolt (kV) transmission line between Boardman and Hemingway. This project, wherein IDACORP holds a 21% interest, is expected to mitigate transmission constraints and provide increased service reliability once it comes online. It is not expected to do so before 2026.
Headwinds
IDACORP’s performance could be adversely impacted due to strict regulatory environment, completion of projects within time and budget, and regulatory compliance costs.
The demand for IDACORP’s services could be negatively impacted by the development of new electricity generating technology and decrease in cost of clean electricity generation from alternative energy sources. This is because the company primarily uses hydroelectric units to produce electricity.
The Zacks Consensus Estimate for NiSource, Unitil Corporation and MGE Energy’s 2023 earnings per share (EPS) indicates an increase of 6.12%, 7.34% and 14.01%, respectively.
Long-term (three- to five-year) earnings growth of NiSource, Unitil Corporation and MGE Energy is pegged at 6.8%, 7.08% and 4.22%, respectively.
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IDACORP (IDA) to Gain From Investments & Cost Management
IDACORP, Inc.’s (IDA - Free Report) long-term investment plans to fortify its infrastructure, improvement in its service territories’ economic conditions and customer growth will boost its earnings. The company’s interest in transmission projects and debt management will further drive its performance.
However, this Zacks Rank #4 (Sell) stock faces risks due to strict licensing process, which may result in increased expenses and interest rates.
Tailwinds
IDACORP’s cost management and focus on producing more electricity from clean sources are expected to benefit its earnings. The company expects a capex of $3.3 billion for the 2023-2027 period, primarily due to its reliability-focused projects. Its regulated electric operations in Idaho generate a relatively stable and growing income stream. In 2022, Idaho Power’s customer base improved 2.4%. Our model estimates customer volume to increase annually in the 2023-2025 period, courtesy of improving economic condition in IDA’s service territories.
IDACORP is rewarding shareholders through dividend hikes. In 2022, IDACORP and Idaho Power paid dividends worth $154 million and $114 million, respectively. Since 2011, the company has raised its annual dividend by 163% to $3.16 per share.
Consistent focus on cost control has enabled the company to keep its rates lower than other suppliers of electricity. The average industrial and residential rates charged by Idaho Power are much lower than the national average. Our model predicts a year-over-year increase in operating income of 1.4% and 6% in 2023 and 2024, respectively.
IDACORP is involved in the Boardman-to-Hemingway (B2H) project — a 300-mile, 500-kilovolt (kV) transmission line between Boardman and Hemingway. This project, wherein IDACORP holds a 21% interest, is expected to mitigate transmission constraints and provide increased service reliability once it comes online. It is not expected to do so before 2026.
Headwinds
IDACORP’s performance could be adversely impacted due to strict regulatory environment, completion of projects within time and budget, and regulatory compliance costs.
The demand for IDACORP’s services could be negatively impacted by the development of new electricity generating technology and decrease in cost of clean electricity generation from alternative energy sources. This is because the company primarily uses hydroelectric units to produce electricity.
Stocks to Consider
Some better-ranked stocks from the same industry are NiSource Inc. (NI - Free Report) , Unitil Corporation (UTL - Free Report) and MGE Energy, Inc. (MGEE - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for NiSource, Unitil Corporation and MGE Energy’s 2023 earnings per share (EPS) indicates an increase of 6.12%, 7.34% and 14.01%, respectively.
Long-term (three- to five-year) earnings growth of NiSource, Unitil Corporation and MGE Energy is pegged at 6.8%, 7.08% and 4.22%, respectively.