On Jun 25, 2014, we issued an updated research report on
Companhia Paranaense de Energia
), or COPEL. The company is well-positioned to gain from rising
electricity demand in Brazil. According to the Ministry of Mines
and Energy's (MME) 10-year plan, the country is likely to witness a
5.9% annual hike in electricity demand till 2019.
In the light of a reviving Brazilian economy, the government is
making huge infrastructural investments. These investments can only
bode well for the electricity companies in the country. Further,
efforts are being made to enhance the country's total installed
capacity for electricity generation to 167 megawatts (MW) by 2019.
To meet the growing electricity needs, COPEL has planned
investments worth roughly R$2.6 billion for 2014 aimed at improving
its electricity generation capacity.
Notably, the company has recently signed an agreement with Voltalia
Energia do Brasil Ltda to acquire a 49% stake in the latter's São
Miguel do GostosoWind Farm complex. The complex is situated in the
state of Rio Grande do Norte and has four wind farms, with
installed electricity generation capacity of 108 MW. The deal,
currently subject to regulatory approvals, will be advantageous for
COPEL upon completion.
Moreover, COPEL is committed towards rewarding its shareholders
through dividend payments. In May 2014, the company paid the
remaining dividend amount of R$235.5 million for 2013. The dividend
included R$0.82 paid per common share, R$1.28 per Class A preferred
share and R$0.90 per Class B preferred share.
The Zacks Consensus Estimate is pegged at $2.00 for 2014 and at
$2.22 for 2015, reflecting year-over-year growth of 16.3% and 10.8%
respectively. Also, earnings are anticipated to increase by 10.4%
in the next five years.
COPEL presently has a $4.1 billion market capitalization and
carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the
electric utility industry include
Black Hills Corporation
NRG Energy, Inc.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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