Companhia Paranaense De Energia (ELP): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
COPEL's third-quarter results fared no better than the previous quarter. Net income declined 14.5% year over year with earnings coming in at $0.18 per ADS. Revenues grew 45.8%, supported by an increase in electricity sales to final customers and distributors, among others. However, top-line growth was more than offset by a 51.7% increase in operating costs and expenses. Also, huge debt levels pose a threat to COPEL's growth. Moreover, being a state-owned company, governmental interference causes delay in the execution of its regular operations. All these factors compelled us to maintain an Underperform recommendation on the stock. However, the company's long-term prospects seem bright, backed by its initiatives to improve power generation capacity and reward shareholders handsomely.

Overview:

Companhia Paranaense de Energia (ELP), also known as COPEL, is a fully integrated electric utility in Brazil. The company is engaged in the generation, transmission and distribution of electricity in the state of Paran . The provincial government of the state controls about 58.6% of the shares of COPEL. The company directly serves approximately 4.3 million customers in 395 municipalities and 1,113 localities.

COPEL has roughly 5,454 megawatt (MW) of generating capacity, 99% of which is hydroelectric. The company owns 20 power plants, including 18 hydroelectric, 1 thermal and 1 wind plant. Moreover, it has interests in as many as ten power generation companies. COPEL also provides telecommunications, natural gas, engineering, water and sanitation services.

COPEL operates primarily through its five subsidiaries, including Copel Gera o e Transmiss o (GeT deals with generation and transmission of electricity), Copel Distribui o (DIS deals with distribution of electricity), Copel Telecom (TEL deals with the telecommunication business), Copel Participa es (manages the company's interests in special purpose entities in the energy, gas, telecommunication, sanitation and service sectors) and Copel Renov veis (deals with the company's investments in renewable energy generation projects).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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