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Dominion Energy Gains From New Projects & Regulated Assets

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We recently updated a research report on Dominion Energy Inc. (D - Free Report) . This energy company is engaged in regulated and non-regulated electricity distribution, generation and transmission businesses. It is poised to benefit from the initiatives undertaken to strengthen existing infrastructure and expand its operations.

What’s Driving the Stock?

Dominion Energy’s portfolio realignment strategy, focusing on regulated assets, is evident from its investments in regulated infrastructure and other fields, whose outputs are sold under long-term purchase agreements.

Planned investment in different segments and positive returns from the completed capital projects are expected to drive earnings of Dominion Energy, at a 6-8% compound average growth rate from 2017 through 2020.

Dominion Energy, taking into consideration the expected rise in demand for natural gas, has started to rev up its natural gas distribution infrastructure. The company is working to replace the aging infrastructure and expand the capacity of its existing pipelines. Dominion Energy’s 1,588-MW Greensville County project is 98% complete. This $1.3-billion project is expected to start commercial operations in late 2018.

Its Cove Point liquefaction project started commercial operations this April and has contributed to strong performance of the company.

Dominion Energy has generated significant funds from the new equity issue. The divestment of non-core assets will help the company to repay debts and strengthen its balance sheet. Repayment of debts will lower the interest burden of the company and boost margins.

The company has been generating strong earnings, courtesy of the above factors. Dominion Energy surpassed earnings estimates in the last four quarters, resulting in average positive surprise of 6.99%. The Zacks Consensus Estimate for 2018 earnings has moved up nearly 1% in the past 90 days.

Zacks Rank & Key Picks

Dominion Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the same industry include Ameren Corporation (AEE - Free Report) , FirstEnergy Corporation (FE - Free Report) and Entergy Corporation (ETR - 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, FirstEnergy and Entergy delivered a positive surprise of 17.19%, 3.51% and 33.22%, respectively, in the last reported quarter.

The Zacks Consensus Estimate for Ameren Corporation, FirstEnergy and Entergy has moved up 3.7%, 3.3% and 11.3%, respectively, in the past 60 days.

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