On Sep 25, 2013, Zacks Investment Research downgraded electric
) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Calpine continues to disappoint market expectation, falling short
of the Zacks Consensus Estimate in the last three quarters with
an average earnings miss of 235.6%. The uninspiring performance
has led to downward estimate revisions.
On Jul 25, Calpine reported second-quarter loss per share of 8
cents, widely missing the Zacks Consensus Estimate of earnings of
8 cents by 200%. The company's third quarter results slated to be
released on Nov 5 do not look promising either in the light of
In the second quarter, Calpine registered a year-over-year
decline in commodity margin in all its services territories. The
softer results were primarily due to lower generation output
resulting from milder weather and a reversal of coal-to-gas
switching in the wake of higher natural gas prices.
Calpine smarting under weak financial results is undertaking a
number of initiatives. In Aug 2013, the company started operating
two combined-cycle natural gas-fired power generation plants,
which together have a generation capacity of more than 900
megawatts. However, it appears that Calpine will have to take
more proactive measures to turn the tide. Long-term sales growth
is presently pegged at -9.86%.
The Zacks Consensus Estimate for 2013 decreased 13.2% in the last
60 days to 53 cents per share. For 2014, the Zacks Consensus
Estimate decreased 8.3% in the last 60 days to 84 cents per
Not all electric utilities are performing as poorly as Calpine
Corporation. Other utility stocks performing well, with a
favorable Zacks Rank, are
UNS Energy Corporation
The AES Corporation
Brookfield Infrastructure Partners L.P.
). UNS Energy has a Zacks Rank #1 (Strong Buy) while AES
Corporation and Brookfield Infrastructure Partners retain a Zacks
Rank #2 (Buy).
AES CORP (AES): Free Stock Analysis Report
BROOKFIELD INFR (BIP): Free Stock Analysis
CALPINE CORP (CPN): Free Stock Analysis
UNS ENERGY CORP (UNS): Free Stock Analysis
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