One of the leading electric utilities of Brazil,
Companhia Paranaense de Energia
(
ELP
), also known as COPEL remained in a Neutral zone, as we maintain a
Neutral long-term recommendation on the stock.
The company is engaged in the generation, transmission, and
distribution of electricity in the State of Parana and sources 99%
of its electricity generation from hydroelectric resources. The
company also provides telecommunications, natural gas, engineering,
water, and sanitation services.
The growth prospects of Copel look bright as revival in the
global economy is inducing growth in emerging markets like Brazil.
Of late, demand for electricity in Brazil is on the rise on the
back of investments made to improve the country's infrastructure
and power generation capabilities. Moreover, hosting of two major
sporting events in the near future will boost electricity
demand.
In accordance with the company'srecently announced capital
investment plans of approximately R$2.26 billion for the fiscal
year 2012, roughly 47.4% will be spent on generation and
transmission, 48.9% on distribution and 3.7% on
telecommunications.
Despite bright long-term prospects, the company's we believe
near-term hurdles restrict our view on the stock. Operating
expenses seem to be rising, registering a 2.5% growth in the fourth
quarter of 2011. Moreover, being a state-owned company, Copel's
decisions are subject to political interference and unfavorable
regulatory system. Also, the company faces stiff competition from
its peers like
Cia Energetica de Minas Gerais
(
CIG
) and
Enersis S.A
. (
ENI
).
The current Zacks Consensus Earnings Estimates for the fiscal
years 2012 and 2013 are $2.45 and $3.07 per share, representing
year-over-year growth of 4.56% and 25.48%, respectively.
The stock currently bears a Zacks #3 Rank, implying a short-term
(1-3 months) Hold rating.
CEMIG SA -ADR (
CIG
): Free Stock Analysis Report
COPEL-ADR PR B (
ELP
): Free Stock Analysis Report
ENERSIS S A ADR (
ENI
): Free Stock Analysis Report
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