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Here's Why You Should Add PNM Resources (PNM) to Your Portfolio
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PNM Resources (PNM - Free Report) continues to benefit from acquisitions, investment in utility infrastructure and development of cost-effective power generation units that help in providing reliable and affordable power. Given its growth opportunities, PNM 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 promising investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for PNM’s 2024 earnings per share (EPS) has increased 1.5% to $2.71 in the past 60 days. The Zacks Consensus Estimate for 2024 revenues is pinned at $2.35 billion, indicating a year-over-year increase of 21.3%.
PNM’s long-term (three to five years) earnings growth rate is 4.6%. The company delivered an average earnings surprise of 2.2% 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, PNM Resources’ ROE is 9.91%, which is higher than the sector’s average of 9.68%. This indicates that the company has been utilizing its funds more constructively than its peers in the utility sector.
Solvency & Liquidity
The times interest earned (TIE) ratio is a solvency ratio. It is used to measure how well the company can cover its interest obligations. The TIE ratio at the end of first-quarter 2024 was 1.3, which being greater than 1 indicates that the company is in a good position to meet its interest obligations.
PNM Resources had $644.9 million in liquidity as of Apr 26, 2024, which is enough to meet its short-term obligations.
Dividend History
The company has been consistently increasing the value of its stockholders through dividends. It has consistently increased dividends since 1996. Currently, PNM’s quarterly dividend is 38.75 cents per share, resulting in an annual dividend of $1.55, up 5.4% from the previous level of $1.47. PNM Resources’ current dividend payout target is in the range of 50-60%. Its current dividend yield of 4.03% is better than the Zacks S&P 500 Composite’s average of 1.27%.
Strategic Investment
In the 2024-2028 period, PNM plans to invest $6.1 billion to further strengthen its transmission and distribution infrastructure and improve the reliability of its operations. The capital investment plan will support an average rate base CAGR of 10% during the same period.
Price Performance
In the past three months, shares of PNM Resources have risen 2.7% compared with the industry’s growth of 2.3%.
The Zacks Consensus Estimate for POR’s 2024 EPS is pinned at $3.08, implying a year-over-year improvement of 29.4%. The Zacks Consensus Estimate for 2024 sales indicates year-over-year growth of 10.3%.
PNW’s long-term (three to five years) earnings growth rate is 7.6%. The Zacks Consensus Estimate for Pinnacle West Capital’s 2024 EPS implies a year-over-year improvement of 7.9%.
DTE’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for DTE Energy’s 2024 EPS implies a year-over-year increase of 16.8%.
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Here's Why You Should Add PNM Resources (PNM) to Your Portfolio
PNM Resources (PNM - Free Report) continues to benefit from acquisitions, investment in utility infrastructure and development of cost-effective power generation units that help in providing reliable and affordable power. Given its growth opportunities, PNM 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 promising investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for PNM’s 2024 earnings per share (EPS) has increased 1.5% to $2.71 in the past 60 days. The Zacks Consensus Estimate for 2024 revenues is pinned at $2.35 billion, indicating a year-over-year increase of 21.3%.
PNM’s long-term (three to five years) earnings growth rate is 4.6%. The company delivered an average earnings surprise of 2.2% 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, PNM Resources’ ROE is 9.91%, which is higher than the sector’s average of 9.68%. This indicates that the company has been utilizing its funds more constructively than its peers in the utility sector.
Solvency & Liquidity
The times interest earned (TIE) ratio is a solvency ratio. It is used to measure how well the company can cover its interest obligations. The TIE ratio at the end of first-quarter 2024 was 1.3, which being greater than 1 indicates that the company is in a good position to meet its interest obligations.
PNM Resources had $644.9 million in liquidity as of Apr 26, 2024, which is enough to meet its short-term obligations.
Dividend History
The company has been consistently increasing the value of its stockholders through dividends. It has consistently increased dividends since 1996. Currently, PNM’s quarterly dividend is 38.75 cents per share, resulting in an annual dividend of $1.55, up 5.4% from the previous level of $1.47. PNM Resources’ current dividend payout target is in the range of 50-60%. Its current dividend yield of 4.03% is better than the Zacks S&P 500 Composite’s average of 1.27%.
Strategic Investment
In the 2024-2028 period, PNM plans to invest $6.1 billion to further strengthen its transmission and distribution infrastructure and improve the reliability of its operations. The capital investment plan will support an average rate base CAGR of 10% during the same period.
Price Performance
In the past three months, shares of PNM Resources have risen 2.7% compared with the industry’s growth of 2.3%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the same industry are Portland General Electric (POR - Free Report) , Pinnacle West Capital Corporation (PNW - Free Report) and DTE Energy (DTE - 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.
The Zacks Consensus Estimate for POR’s 2024 EPS is pinned at $3.08, implying a year-over-year improvement of 29.4%. The Zacks Consensus Estimate for 2024 sales indicates year-over-year growth of 10.3%.
PNW’s long-term (three to five years) earnings growth rate is 7.6%. The Zacks Consensus Estimate for Pinnacle West Capital’s 2024 EPS implies a year-over-year improvement of 7.9%.
DTE’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for DTE Energy’s 2024 EPS implies a year-over-year increase of 16.8%.