Eversource Energy’s (ES - Free Report) robust investment in transmission and distribution networks along with the expansion of renewable operations and its stable financial position will boost performance in the long term.
This Zacks Rank #2 (Buy) utility is a promising bet at the moment, courtesy of consistent customer growth, focus on modernizing infrastructure and initiatives to boost shareholders’ value.
The Zacks Consensus Estimate for 2019 earnings is pegged at $3.43 on $8.95 billion revenues. The bottom is expected to rise 4.5% and the top line to grow 5.99% year over year, respectively.
The consensus mark for 2020 earnings is pegged at $3.64 on revenues of $9.2 billion. This calls for a 6.1% and 2.7% year-over-year increase in the bottom and the top lines, respectively.
Its long-term (three to five years) EPS growth rate is projected at 5.6%.
Strong Investment Plans
The company intends to invest nearly $9.1 billion in the 2019-2023 period in its electric transmission and distribution networks to upgrade its electric distribution and transmission infrastructure. Its reliability projects — the Greater Boston Reliability Solutions and Greater Hartford Central Connecticut Solutions — are moving forward per plans.
Eversource Energy will invest $0.6 billion and $2.3 billion in water utility and gas distribution businesses, respectively, during the 2019-2023 period. These controlled investments will help the company improve earnings per share by 5-7% over the 2019-2023 time frame from the 2018 level of $3.25.
Focus on Renewables
Eversource Energy’s attention to renewable energy generation would help it meet the renewable energy mandates by state governments and enjoy incentives offered by state and federal programs.
Eversource Energy and Danish wind energy developer Ørsted have initiated the development of the Bay State Wind project, which will have a capacity to produce 4,000 MW of renewable energy. Eversource Energy and Ørsted each holds a 50% ownership in that wind project.
Water & Wastewater Service Business
Eversource Energy targets to expand its water and wastewater service business through acquisitions. The company is presently focusing on improving the quality of water services through four water reliability projects. Eversource Energy will invest nearly $200 million in these projects to improve the quality of water services.
Price Performance & Consistent Dividend
Shares of Eversource Energy have soared 37.1% on a year-over-year basis compared with the industry’s growth of 14.6% and against the decline of S&P 500 composite’s 1.5%.
Price Performence (One Year)
For 2019, the board of directors has sanctioned a 5.9% hike in annual dividend from 2018 levels. The company plans to hike dividends annually at a rate that is in line with the estimated earnings growth rate of 5-7%.
Eversource Energy has been paying out dividends to its shareholders for more than two decades. The current annualized dividend of $2.14 reflects a dividend yield of 2.5%, better than the industry’s 2.8% and the S&P 500 composite’s average of 1.9%.
Other Stocks to Consider
Some other top-ranked stocks from the same industry are American Electric Power Company (AEP - Free Report) , Duke Energy (DUK - Free Report) and NRG Energy (NRG - Free Report) . While American Electric Power and Duke Energy hold a Zacks Rank #2, NRG Energy sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
American Electric Power’s long-term earnings growth is projected at 5.6%. The Zacks Consensus Estimate for 2019 earnings has moved up 0.2% in the past 90 days to $4.14.
Duke Energy’s long-term earnings growth is projected at 4.8%. The Zacks Consensus Estimate for 2019 earnings has moved up 1.8% in the past 90 days to $4.98.
NRG Energy’s long-term earnings growth is projected at 36.2%. The Zacks Consensus Estimate for 2019 earnings has moved up 9% in the past 90 days to $4.08.
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