Exelon Corporation’s (EXC - Free Report) investments in infrastructure and strategic acquisitions are expected to strengthen its existing portfolio of assets. In addition, its hedging program to manage market risks will drive performance
Retaining this Zacks Rank #3 (Hold) stock in your portfolio now is a good idea, given the following positive factors.
Positive Growth Projections: The Zacks Consensus Estimate for earnings is $2.68 on revenues of $31.71 billion for 2017. While the bottom line is on par year over year, the top-line projection is 1.1% higher. For 2018, the Zacks Consensus Estimate for earnings is pegged at $2.85 on $31.83 billion revenues. While earnings represent a 6.4% rally, revenues reflect a 0.3% rise.
Exelon has long-term expected earnings per share growth rate of 5%.
Estimates Moving Up: The Zacks Consensus Estimate has witnessed upward revisions in the last 30 days. Estimates for 2017 have inched up 0.8% in the last 30 days.
Strong Return: Exelon’s shares have rallied 10.1% in the last 12 months, outperforming the industry’s gain of 5.4%.
Positive Earnings Surprise History: Exelon surpassed the Zacks Consensus Estimate in three of the last four quarters with an average beat of 7.79%.
Exelon invests substantially in infrastructure projects in addition to expanding its renewable and fossil fuel generating capacity. It plans to invest nearly $20 billion over the 2017-2020 period, in a bid to improve reliability of its operations. Such systematic investments in regulated assets will drive earnings growth in the range of 6-8% and rate base growth of 6.5% during this time frame.
Exelon closed its merger with Pepco Holdings Inc. forming one of the largest power distributor in the United States. This transaction will substantially increase the previously stated benefits for customers in Washington D.C. as well as provide several other socio-economic advantages. This segment contributed $2,248 million to the top line in the first half of 2017.
The acquisition of FitzPatrick nuclear station will add nearly 838 MW to Exelon’s generation capacity and will be accretive to its earnings. This plant will help the company serve more customers without increasing its carbon emission levels.
Exelon continues with its hedging program to manage market risks and protect the value of its generation. The company’s hedging program involves hedging of commodity risks for expected generation, typically on a ratable basis, over a three-year period. The proportion of expected generation hedged as of Jun 30, 2017, was 96-99% for 2017, 71-74% for 2018, and 39-42% for 2019.
Stocks to Consider
Some better-ranked stocks from the same industry are Ameren Corporation (AEE - Free Report) , CenterPoint Energy, Inc. (CNP - Free Report) and Fortis Inc. (FTS - Free Report) each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ameren Corporation delivered a four-quarter average positive surprise of 2.83%. The company’s long-term earnings growth rate is pegged at 6.50%.
CenterPoint Energy delivered a four-quarter average positive surprise of 10.34%. The company’s long-term earnings growth rate is pegged at 4.33%.
Fortis delivered a four-quarter average positive surprise of 10.99%. The company’s long-term earnings growth rate is pegged at 5.50%.
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