Back to top

Image: Bigstock

Here's Why You Should Add Exelon (EXC) to Your Portfolio Now

Read MoreHide Full Article

Exelon Corporation’s (EXC - Free Report) long-term investment plans to strengthen its transmission and distribution infrastructure will drive its performance. Exelon's revenue decoupling mitigates the impact of load fluctuation and its cost-saving initiatives boost margins. Given its growth opportunities and strong dividend history, EXC makes for a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.

Growth Projections & Surprise History

The Zacks Consensus Estimate for EXC’s 2023 earnings per share (EPS) has increased 0.4% to $2.36 in the past 60 days. This indicates a year-over-year bottom-line improvement of 3.96%.

EXC’s long-term (three- to five-year) earnings growth rate is 6.68%. It delivered an average earnings surprise of 1.47% in the last four quarters.

Return on Equity

Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, EXC’s ROE is 9.41%, higher than the industry’s average of 4.91%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.

Dividend History

Exelon has been consistently increasing shareholders’ value by paying dividends. Currently, its quarterly dividend is 36 cents per share. This resulted in an annualized dividend of $1.44 per share, indicating a 6.7% improvement from the previous year’s $1.35.

The company aims to increase its dividend per share by 6-8% annually through 2026, subject to the approval of its board of directors. Its current dividend yield is 3.45%, better than the Zacks S&P 500 Composite's average of 1.44%.

Systematic Investments

EXC invests substantially in infrastructure projects. It plans to invest nearly $31.3 billion during 2023-2026 in regulated utility operations for grid modernization and to increase the resilience of its infrastructure for the benefit of its customers. Exelon plans to invest $7.2 billion in 2023 to further strengthen its infrastructure.

The company also looks forward to investing $20.8 billion in electric distribution, $6.7 billion in electric transmission and $3.9 billion in gas delivery in the 2023-2026 period. The systematic investments will support rate-based growth of nearly 8% through 2026.

Price Performance

In the past month, EXC’s shares have rallied 4.5% against the industry’s average decline of 1.3%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

Other Stocks to Consider

A few other top-ranked stocks from the same industry are FirstEnergy Corp. (FE - Free Report) , Alliant Energy (LNT - Free Report) and NextEra Energy, Inc. (NEE - 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.

FirstEnergy’s long-term earnings growth rate is 6.45%. The Zacks Consensus Estimate for the company’s 2023 EPS is pinned at $2.51, implying a year-over-year increase of 4.2%.

Alliant Energy’s long-term earnings growth rate is 6.47%. The consensus estimate for the company’s 2023 EPS is pegged at $2.88, indicating a year-over-year improvement of 2.9%.

NextEra Energy’s long-term earnings growth rate is 8.38%. The consensus mark for the company’s 2023 EPS is pinned at $3.11, indicating year-over-year growth of 7.2%.

 

Published in