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Xcel Energy (XEL) Gains From Investments & Renewable Expansion
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Xcel Energy Inc.’s (XEL - Free Report) strategic investments in infrastructure projects and focus on clean power generation will further boost its performance. The company’s consistent customer base growth acts as a tailwind.
However, this Zacks Rank #3 (Hold) company faces risks related to the failure of transmission and distribution lines.
Tailwinds
Xcel Energy continues to invest substantially in its utility assets to provide reliable services to its customers and effectively meet rising electricity demand. It aims to spend $39 billion during 2024-2028. These investments are aimed at strengthening and expanding its transmission, distribution, electric generation and renewable projects.
XEL is focusing on clean-energy transition. After completing six wind projects with 1,500 megawatt (MW) capacities in 2020, the company completed four wind farms, adding another 800 MW of clean energy generation in 2023. XEL's total wind capacity is 11,000 MW, out of which 4,500 MW is from owned wind farms.
It received regulatory approval for the Minnesota resource plan, which includes the closing of coal plants like the A.S. King Plant by 2028 and Sherco 3 within 2030. In 2023, the company expanded a solar energy project at Sherco, adding 250 MW to a 460 MW array. This will help utilize the transmission rights for the first of the three retiring coal units.
High quality and reliable services provided by the company attract new customers and allow it to serve an expanding electric and natural gas customer base. In 2023, the electric and natural gas customer base increased 1.1% each. In the same time frame, sales volumes for the electric segment and natural gas volumes increased 1% and 1.4%, respectively, 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 adversely impact the results of operations if expenses are not recovered.
NiSource’s long-term earnings growth rate is 7.15%. The Zacks Consensus Estimate for NI’s 2024 EPS implies an improvement of 6.9% from the bottom line recorded in 2023.
UTL’s long-term earnings growth rate is 7.08%. The Zacks Consensus Estimate for UTL’s 2024 EPS implies an improvement of 3.6% from the bottom line recorded in 2023.
The Zacks Consensus Estimate for TAC’s 2024 EPS implies a year-over-year decrease of 67.5%. The company delivered an average earnings surprise of 142.6% in the last four quarters.
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Xcel Energy (XEL) Gains From Investments & Renewable Expansion
Xcel Energy Inc.’s (XEL - Free Report) strategic investments in infrastructure projects and focus on clean power generation will further boost its performance. The company’s consistent customer base growth acts as a tailwind.
However, this Zacks Rank #3 (Hold) company faces risks related to the failure of transmission and distribution lines.
Tailwinds
Xcel Energy continues to invest substantially in its utility assets to provide reliable services to its customers and effectively meet rising electricity demand. It aims to spend $39 billion during 2024-2028. These investments are aimed at strengthening and expanding its transmission, distribution, electric generation and renewable projects.
XEL is focusing on clean-energy transition. After completing six wind projects with 1,500 megawatt (MW) capacities in 2020, the company completed four wind farms, adding another 800 MW of clean energy generation in 2023. XEL's total wind capacity is 11,000 MW, out of which 4,500 MW is from owned wind farms.
It received regulatory approval for the Minnesota resource plan, which includes the closing of coal plants like the A.S. King Plant by 2028 and Sherco 3 within 2030. In 2023, the company expanded a solar energy project at Sherco, adding 250 MW to a 460 MW array. This will help utilize the transmission rights for the first of the three retiring coal units.
High quality and reliable services provided by the company attract new customers and allow it to serve an expanding electric and natural gas customer base. In 2023, the electric and natural gas customer base increased 1.1% each. In the same time frame, sales volumes for the electric segment and natural gas volumes increased 1% and 1.4%, respectively, 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 adversely impact the results of operations if expenses are not recovered.
Stocks to Consider
Some better-ranked stocks from the same industry are NiSource Inc. (NI - Free Report) , Unitil Corporation (UTL - Free Report) and TransAlta (TAC - 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.
NiSource’s long-term earnings growth rate is 7.15%. The Zacks Consensus Estimate for NI’s 2024 EPS implies an improvement of 6.9% from the bottom line recorded in 2023.
UTL’s long-term earnings growth rate is 7.08%. The Zacks Consensus Estimate for UTL’s 2024 EPS implies an improvement of 3.6% from the bottom line recorded in 2023.
The Zacks Consensus Estimate for TAC’s 2024 EPS implies a year-over-year decrease of 67.5%. The company delivered an average earnings surprise of 142.6% in the last four quarters.