Back to top

Image: Bigstock

Exelon (EXC) to Invest $31.8B, Gives Road Map for Growth

Read MoreHide Full Article

Exelon Corporation (EXC - Free Report) , at its recently held Analyst Day, announced a concrete plan for growth and discussed strategies that can drive its performance over 2016 to 2020. The objective of Exelon is to invest in infrastructure while generating clean and affordable electricity for its customers.  

The Road Map

Exelon will invest nearly $31.8 billion over the said five-year period. An amount of $25.2 billion, or nearly 80% of the total, will be invested in Exelon Utilities, which will likely drive earnings growth in the range of 7% to 9% and rate base growth of 6.1% in that time frame.

Bifurcation of Investment, and Cost Savings

Exelon, post its acquisition of Pepco, serves nearly 10 million customers, making the long-term investment an absolute essential to serve its expanding user base in an effective and efficient manner. The before-mentioned $25.2 billion utility investments will be divided across Electric Distribution ($16.3 billion), Electric Transmission ($5.6 billion), Gas Delivery ($2.5 billion) and Smart Grid/Smart Meter ( $0.8 billion).

The strong performance of the company is expected to generate ample free cash flow to be used to lower debts in excess of $3 billion from 2016 to 2020 and thereby strengthen its balance sheet.

The company is also gradually lowering its operating expenses significantly through its costs saving initiatives. Exelon’s operating and maintenance expenses are expected to reduce by an average of 1.1% over the 2016 to 2020 time frame.

Exelon – Working Toward a Zero-Carbon Future

Exelon recognizes the importance of zero-carbon electricity generation and is working its way toward that target with firm resolution. Primarily, the company believes in the continued operation of its nuclear fleet as the means to cost-effective, zero-carbon solutions for its customers. The company also aims to adopt a uniform price in CO2 in wholesale markets as a substitute for technology-specific subsidies.

Zacks Rank

Exelon currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the utility space are Pinnacle West Capital Corporation (PNW - Free Report) , DTE Energy (DTE - Free Report) and CMS Energy (CMS - Free Report) . All three carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Published in