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Xcel Energy (XEL) Rides on Investments & Clean Power Generation
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Xcel Energy Inc.’s (XEL - Free Report) long-term investments in infrastructure projects and focus on clean power generation will further boost its earnings performance. The company’s consistent customer base growth acts as a tailwind.
However, this currently Zacks Rank #3 (Hold) company has to face risks related to the failure of transmission and distribution lines.
Tailwinds
Xcel Energy aims to spend $34 billion during the 2024-2028 period, up $4.5 billion from its previous long-term capital expenditure plan. These investments are aimed at strengthening and expanding the company’s transmission, distribution, electric generation and renewable projects. Xcel Energy expects to deliver long-term earnings per share (EPS) growth in the 5-7% range from a 2022 base of $3.15.
Xcel Energy is focusing on clean-energy transition. After completing six wind projects with 1,500 megawatt (MW) capacities in 2020, it completed four wind farms, adding another 800 MW of clean energy generation capacity to its portfolio. Xcel Energy’s high-quality wind farms lowered emissions and generated nearly $3 billion of fuel-related customer savings and PTCs since 2017.
High quality and reliable services provided by the company attract new customers and allow Xcel Energy to serve an expanding electric and natural gas customer base. In the first nine months of 2023, the electric and natural gas customer base increased 1.1% and 1%, respectively. Sales volume for the electric segment improved 1.1% during the same time frame. Natural gas volume increased 0.4% year over year.
Headwinds
Xcel Energy’s natural gas and electric transmission and distribution operations are exposed to several risks, including explosions, leaks and mechanical setbacks. These incidents can affect the company’s operations, thereby impacting its financial performance.
XEL’s operations are subject to commodity price fluctuations. Despite the existing fuel recovery mechanisms in most of its service territories, higher fuel costs could significantly impact the results of operations if expenses are not recovered.
NRG Energy’s long-term earnings growth rate is 13.75%. The company delivered an average earnings surprise of 4.7% in the last four quarters.
Consolidated Edison’s long-term earnings growth rate is 2%. The Zacks Consensus Estimate for the company’s 2024 EPS is pinned at $5.29, implying a year-over-year increase of 5.5%.
Entergy’s long-term earnings growth rate is 7.01%. The company delivered an average earnings surprise of 4.4% in the last four quarters.
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Xcel Energy (XEL) Rides on Investments & Clean Power Generation
Xcel Energy Inc.’s (XEL - Free Report) long-term investments in infrastructure projects and focus on clean power generation will further boost its earnings performance. The company’s consistent customer base growth acts as a tailwind.
However, this currently Zacks Rank #3 (Hold) company has to face risks related to the failure of transmission and distribution lines.
Tailwinds
Xcel Energy aims to spend $34 billion during the 2024-2028 period, up $4.5 billion from its previous long-term capital expenditure plan. These investments are aimed at strengthening and expanding the company’s transmission, distribution, electric generation and renewable projects. Xcel Energy expects to deliver long-term earnings per share (EPS) growth in the 5-7% range from a 2022 base of $3.15.
Xcel Energy is focusing on clean-energy transition. After completing six wind projects with 1,500 megawatt (MW) capacities in 2020, it completed four wind farms, adding another 800 MW of clean energy generation capacity to its portfolio. Xcel Energy’s high-quality wind farms lowered emissions and generated nearly $3 billion of fuel-related customer savings and PTCs since 2017.
High quality and reliable services provided by the company attract new customers and allow Xcel Energy to serve an expanding electric and natural gas customer base. In the first nine months of 2023, the electric and natural gas customer base increased 1.1% and 1%, respectively. Sales volume for the electric segment improved 1.1% during the same time frame. Natural gas volume increased 0.4% year over year.
Headwinds
Xcel Energy’s natural gas and electric transmission and distribution operations are exposed to several risks, including explosions, leaks and mechanical setbacks. These incidents can affect the company’s operations, thereby impacting its financial performance.
XEL’s operations are subject to commodity price fluctuations. Despite the existing fuel recovery mechanisms in most of its service territories, higher fuel costs could significantly impact the results of operations if expenses are not recovered.
Stocks to Consider
Some better-ranked stocks from the same industry are NRG Energy (NRG - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Consolidated Edison (ED - Free Report) and Entergy Corporation (ETR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
NRG Energy’s long-term earnings growth rate is 13.75%. The company delivered an average earnings surprise of 4.7% in the last four quarters.
Consolidated Edison’s long-term earnings growth rate is 2%. The Zacks Consensus Estimate for the company’s 2024 EPS is pinned at $5.29, implying a year-over-year increase of 5.5%.
Entergy’s long-term earnings growth rate is 7.01%. The company delivered an average earnings surprise of 4.4% in the last four quarters.