We have maintained our Neutral recommendation on
). The company currently has a Zacks Rank #3 (Hold).
Why the Reiteration?
The reiteration was primarily based on risks associated with
Exelon Corporation's highly regulated operations and pending rate
cases. However, we consider the company's solid utility
operations and strong financial position as catalysts, which can
mitigate the challenges.
In the fourth quarter and full year of 2012, Exelon Corporation's
earnings per share and revenues missed the Zacks Consensus
Estimates primarily due to higher operating expenses and
depreciation and amortization costs, and lower demand due to
sluggish economic recovery.
Exelon Corporation continues to focus on maintaining a strong
financial position. The company's cash balance was $1.4 billion
as of Dec 31, 2012, and cash generated from operating activities
were $6.1 billion in 2012. This financial condition enables the
company to follow a steady inorganic as well as organic growth
It is nice to see that Exelon Corporation generates maximum
energy from its nuclear plants and continues to construct plants
with the utilization of renewable sources. These initiatives will
consequently allow the company to produce additional 420 megawatt
carbon-free power in the next five years. The additional output
will benefit Exelon Corporation with the Environmental Protection
Agency's regulations coming into effect in late 2014.
In addition, we appreciate the company's strategy to curb the
quarterly dividend rate in order to retain cash and make
investments in profitable ventures. We believe contributions from
the acquired assets to the top line will increase in the future.
Other Stocks to Consider
Other stocks from the industry that are presently performing
Brookfield Infrastructure Partners L.P.
Empresa Nacional de Electricidad S.A.
Pike Electric Corporation
). All the three stocks carry a Zacks Rank #1 (Strong Buy).
BROOKFIELD INFR (BIP): Free Stock Analysis
ENDESA-CHILE (EOC): Free Stock Analysis
EXELON CORP (EXC): Free Stock Analysis Report
PIKE ELECTRIC (PIKE): Free Stock Analysis
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