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Exelon (EXC) to Gain From Cost Management & $31B Investment
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Exelon Corporation (EXC - Free Report) , post-separation from Constellation Energy, is solely focused on the transmission and distribution of energy. EXC’s cost-saving initiatives and stable operations enable it to generate a steady cash flow and reward its shareholders.
However, stringent regulations and the risk of malfunctioning equipment or facilities used in delivery systems could interrupt electric transmission and electric and natural gas delivery.
Tailwinds
Exelon invests substantially in infrastructure projects and plans to invest nearly $31.3 billion during the 2023-2026 forecast period in regulated utility operations for grid modernization and increasing the resilience of its infrastructure to benefit customers.
EXC will invest $20.8 billion in electric distribution, $6.7 billion in electric transmission and $3.9 billion in gas delivery in the aforesaid time frame. Its systematic investments will support rate base growth of 8% through 2026. The company also targets long-term EPS growth of 6-8% through 2026.
Exelon targets lowering operating and maintenance expenses through its cost-saving initiatives. Since 2015, the company has announced more than $1.1 billion in cost reductions that have benefited customers. Its ongoing cost-saving measures, keeping costs below the inflation rate, will further favor customers going forward.
Backed by a steady cash flow, Exelon continues to pay out regular dividends to its shareholders. Its current quarterly dividend rate is 36 cents per share, resulting in an annualized dividend of $1.44. The annual dividend reflects a dividend yield of 3.56%, better than the Zacks S&P 500 Composite’s average of 1.65%.
Headwinds
Exelon’s energy-delivery businesses are highly regulated and could face regulatory or legislative actions that might adversely impact operations or financial results. Fundamental changes in regulation or legislation and violation of tariffs, market rules and anti-manipulation laws could disrupt EXC’s business plans and hurt its operations or financial results.
A breakdown of the equipment or facilities used in the delivery systems could interrupt electric transmission and electric and natural gas delivery, which may reduce revenues and increase maintenance and capital expenditures.
Price Performance
In the last three months, Exelon’s shares have returned 2.4% against the industry’s decline of 2.4%.
Some utilities in the same industry with a well-chalked-out investment plan for strengthening services are NextEra Energy (NEE - Free Report) , American Electric Power Company, Inc. (AEP - Free Report) and FirstEnergy Corporation (FE - Free Report) .
NextEra Energy aims to invest $52.7 billion from 2023 through 2027 to strengthen its infrastructure. Courtesy of persistent renewable asset additions to its generation portfolio and execution across all business segments, NextEra Energy expects to witness strong earnings growth in the long-term. The long-term (three- to five-year) earnings growth of NextEra Energy is currently pegged at 8.38%.
American Electric aims to invest nearly $40 billion in its transmission and distribution business during the 2023-2027 period to construct a more efficient grid and deliver custom energy solutions to customers. Its long-term earnings growth is currently pegged at 6-7%.
FirstEnergy has plans to invest nearly $18 billion in the 2021-2025 period to strengthen its existing operations. Bolstering the transmission and renewable generation assets will allow the company to transmit electricity even during adverse weather conditions and provide emission-free electricity to customers. Such planned investment will result in annual rate-base growth of 7% over the 2024-2025 period. FirstEnergy expects its earnings per share to improve annually in the range of 6-8% in the long term.
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Exelon (EXC) to Gain From Cost Management & $31B Investment
Exelon Corporation (EXC - Free Report) , post-separation from Constellation Energy, is solely focused on the transmission and distribution of energy. EXC’s cost-saving initiatives and stable operations enable it to generate a steady cash flow and reward its shareholders.
However, stringent regulations and the risk of malfunctioning equipment or facilities used in delivery systems could interrupt electric transmission and electric and natural gas delivery.
Tailwinds
Exelon invests substantially in infrastructure projects and plans to invest nearly $31.3 billion during the 2023-2026 forecast period in regulated utility operations for grid modernization and increasing the resilience of its infrastructure to benefit customers.
EXC will invest $20.8 billion in electric distribution, $6.7 billion in electric transmission and $3.9 billion in gas delivery in the aforesaid time frame. Its systematic investments will support rate base growth of 8% through 2026. The company also targets long-term EPS growth of 6-8% through 2026.
Exelon targets lowering operating and maintenance expenses through its cost-saving initiatives. Since 2015, the company has announced more than $1.1 billion in cost reductions that have benefited customers. Its ongoing cost-saving measures, keeping costs below the inflation rate, will further favor customers going forward.
Backed by a steady cash flow, Exelon continues to pay out regular dividends to its shareholders. Its current quarterly dividend rate is 36 cents per share, resulting in an annualized dividend of $1.44. The annual dividend reflects a dividend yield of 3.56%, better than the Zacks S&P 500 Composite’s average of 1.65%.
Headwinds
Exelon’s energy-delivery businesses are highly regulated and could face regulatory or legislative actions that might adversely impact operations or financial results. Fundamental changes in regulation or legislation and violation of tariffs, market rules and anti-manipulation laws could disrupt EXC’s business plans and hurt its operations or financial results.
A breakdown of the equipment or facilities used in the delivery systems could interrupt electric transmission and electric and natural gas delivery, which may reduce revenues and increase maintenance and capital expenditures.
Price Performance
In the last three months, Exelon’s shares have returned 2.4% against the industry’s decline of 2.4%.
Image Source: Zacks Investment Research
Stocks to Consider
Exelon currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some utilities in the same industry with a well-chalked-out investment plan for strengthening services are NextEra Energy (NEE - Free Report) , American Electric Power Company, Inc. (AEP - Free Report) and FirstEnergy Corporation (FE - Free Report) .
NextEra Energy aims to invest $52.7 billion from 2023 through 2027 to strengthen its infrastructure. Courtesy of persistent renewable asset additions to its generation portfolio and execution across all business segments, NextEra Energy expects to witness strong earnings growth in the long-term. The long-term (three- to five-year) earnings growth of NextEra Energy is currently pegged at 8.38%.
American Electric aims to invest nearly $40 billion in its transmission and distribution business during the 2023-2027 period to construct a more efficient grid and deliver custom energy solutions to customers. Its long-term earnings growth is currently pegged at 6-7%.
FirstEnergy has plans to invest nearly $18 billion in the 2021-2025 period to strengthen its existing operations. Bolstering the transmission and renewable generation assets will allow the company to transmit electricity even during adverse weather conditions and provide emission-free electricity to customers. Such planned investment will result in annual rate-base growth of 7% over the 2024-2025 period. FirstEnergy expects its earnings per share to improve annually in the range of 6-8% in the long term.