We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ED or PEG: Which Utility Electric Power Stock to Choose?
Read MoreHide Full Article
The Zacks Utility – Electric Power industry is involved in the generation, transmission, distribution, storage and sale of electricity to customers. A substantial portion of utilities’ earnings are generated from regulated operations. A clear transition is evident in this industry, with more companies declaring zero-emission goals. Research and development over the years have resulted in a substantial decline in the cost of setting up utility-scale renewable power projects, aiding in reducing emissions.
Per the U.S. Energy Information Administration, electricity production in the United States will increase 2.4% year over year in 2024 to 11.22 billion kilowatt hours per day. The increase in 2024 is primarily due to higher contributions from solar assets. Solar share in total generation is expected to touch 6% in 2024, with 36 gigawatts (GW) expected to be added to the generation mix.
In order to maintain, upgrade and expand operations, utilities approach capital markets for loans. The utilities have been enjoying near-zero interest rates for the past few years. However, multiple rate hikes pushed up interest rates.
The Federal Reserve has not increased the benchmark rate in the last three meetings in 2023 and indicated rate cuts in 2024, which will definitely be a positive for capital-intensive utilities operating in the United States as rate cuts will bring down capital servicing costs substantially from the current levels.
In this article, we run a comparative analysis on two electric supply companies — Consolidated Edison (ED - Free Report) and Public Service Enterprise Group (PEG - Free Report) — to decide which stock is worth retaining in your portfolio now. Both utilities discussed have robust long-term capital expenditure plans to strengthen and further expand infrastructure.
Consolidated Edison has a market capitalization of $31.3 billion, while the same for Public Service Enterprise is $29.3 billion.
Growth Projections & Surprise History
The Zacks Consensus Estimate for Consolidated Edison’s 2024 earnings is pegged at $5.29, which indicates an increase of 0.4% in the last 90 days. The company reported an average positive surprise of 6.1% in the previous four quarters.
The Zacks Consensus Estimate for Public Service Enterprise Group’s 2024 earnings is pegged at $4.54, which suggests an increase of 0.5% in the last 90 days. The company reported an average positive surprise of 11.1% in the last four reported quarters.
Debt-to-Capital
The debt-to-capital is a good indicator of the financial position of a company. It shows how much debt is used to run the business. Consolidated Edison and Public Service Enterprise Group have a debt-to-capital of 49.49% and 52.91%, respectively compared with the industry’s 54.71%. Both stocks are using less debt than the industry average and Consolidated Edison is using comparatively lower debt than Public Service Enterprise Group.
Current Ratio
The current ratio measures a company's ability to pay short-term obligations or those due within a year. At present, the current ratio of Consolidated Edison is 0.98 and Public Service Enterprise Group is 0.63. Both companies have current ratios lower than 1, but Consolidated Edison’s ratio is better than the industry average of 0.92.
Dividend Yield
Utility companies generally distribute dividends. Currently, the dividend yield for Consolidated Edison is pegged at 3.58%, while Public Service Enterprise Group’s dividend yield is 3.88%. The dividend yield of the industry is 3.56%.
Price Performance
In the past month, Consolidated Edison’s shares have gained 0.1% against the industry's decline of 1.2%, whereas Public Service Enterprise Group’s shares lost 4%.
Image Source: Zacks Investment Research
Outcome
Even though both companies are efficiently providing service to customers and should be accumulated in one’s portfolio, the above comparisons put Consolidated Edison ahead of Public Service Enterprise Group.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
ED or PEG: Which Utility Electric Power Stock to Choose?
The Zacks Utility – Electric Power industry is involved in the generation, transmission, distribution, storage and sale of electricity to customers. A substantial portion of utilities’ earnings are generated from regulated operations. A clear transition is evident in this industry, with more companies declaring zero-emission goals. Research and development over the years have resulted in a substantial decline in the cost of setting up utility-scale renewable power projects, aiding in reducing emissions.
Per the U.S. Energy Information Administration, electricity production in the United States will increase 2.4% year over year in 2024 to 11.22 billion kilowatt hours per day. The increase in 2024 is primarily due to higher contributions from solar assets. Solar share in total generation is expected to touch 6% in 2024, with 36 gigawatts (GW) expected to be added to the generation mix.
In order to maintain, upgrade and expand operations, utilities approach capital markets for loans. The utilities have been enjoying near-zero interest rates for the past few years. However, multiple rate hikes pushed up interest rates.
The Federal Reserve has not increased the benchmark rate in the last three meetings in 2023 and indicated rate cuts in 2024, which will definitely be a positive for capital-intensive utilities operating in the United States as rate cuts will bring down capital servicing costs substantially from the current levels.
In this article, we run a comparative analysis on two electric supply companies — Consolidated Edison (ED - Free Report) and Public Service Enterprise Group (PEG - Free Report) — to decide which stock is worth retaining in your portfolio now. Both utilities discussed have robust long-term capital expenditure plans to strengthen and further expand infrastructure.
Both stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Consolidated Edison has a market capitalization of $31.3 billion, while the same for Public Service Enterprise is $29.3 billion.
Growth Projections & Surprise History
The Zacks Consensus Estimate for Consolidated Edison’s 2024 earnings is pegged at $5.29, which indicates an increase of 0.4% in the last 90 days. The company reported an average positive surprise of 6.1% in the previous four quarters.
The Zacks Consensus Estimate for Public Service Enterprise Group’s 2024 earnings is pegged at $4.54, which suggests an increase of 0.5% in the last 90 days. The company reported an average positive surprise of 11.1% in the last four reported quarters.
Debt-to-Capital
The debt-to-capital is a good indicator of the financial position of a company. It shows how much debt is used to run the business. Consolidated Edison and Public Service Enterprise Group have a debt-to-capital of 49.49% and 52.91%, respectively compared with the industry’s 54.71%. Both stocks are using less debt than the industry average and Consolidated Edison is using comparatively lower debt than Public Service Enterprise Group.
Current Ratio
The current ratio measures a company's ability to pay short-term obligations or those due within a year. At present, the current ratio of Consolidated Edison is 0.98 and Public Service Enterprise Group is 0.63. Both companies have current ratios lower than 1, but Consolidated Edison’s ratio is better than the industry average of 0.92.
Dividend Yield
Utility companies generally distribute dividends. Currently, the dividend yield for Consolidated Edison is pegged at 3.58%, while Public Service Enterprise Group’s dividend yield is 3.88%. The dividend yield of the industry is 3.56%.
Price Performance
In the past month, Consolidated Edison’s shares have gained 0.1% against the industry's decline of 1.2%, whereas Public Service Enterprise Group’s shares lost 4%.
Image Source: Zacks Investment Research
Outcome
Even though both companies are efficiently providing service to customers and should be accumulated in one’s portfolio, the above comparisons put Consolidated Edison ahead of Public Service Enterprise Group.