Integrys reported dull top and bottom line numbers in the first
quarter of 2012. The company reported adjusted earnings of $1.55
per share compared with $1.57 per share in the year ago quarter.
The underperformance was due to mild weather patterns affecting
electric margins. Cognizant of these factors, we reiterate our
Neutral recommendation on
Integrys Energy Group Inc
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Integrys' recent strategy to refocus on its traditional utility
operations and strong customer retention rate is expected to propel
its income portfolio in the long run. Besides, we anticipate that
its retail electric operation will provide an added impetus to
However, Integrys' future operations might be slowed down by
federal regulatory restrictions on rates and inadequate
availability of capital resources. Unexpected disasters whether
natural or infrastructural and failure to upgrade existing
facilities could also constrain the company's development. Although
having a solid investment foundation, the company is exposed to
macroeconomic volatilities which impacts energy prices limiting
company's future growth potential.
On a more positive note, Integrys' continuous optimization of its
asset portfolio mix is anticipated to provide increased returns to
its shareholders and also aid in propelling its stock position.
Moreover, its strong financial outlook and healthy dividend will
further help in keeping its growth momentum.
Integrys expects pro forma earnings in 2012 in the band of $3.35 -
$3.55 per share. The company estimates GAAP earnings in 2012 in the
range of $3.38 - $3.58 per share. The Zacks Consensus Estimates for
the second quarter and 2012 are currently pegged at 38 cents per
share and $3.43 per share, respectively.
Integrys presently retains a Zacks #3 Rank which translates into a
short-term Hold rating. The company's peers include
Wisconsin Energy Corporation
Alliant Energy Corporation
Based in Illinois Chicago, Integrys Energy Group engages in natural
gas and electric utility operations, and non-regulated energy
operations in the United States and Canada. It generates and
supplies electricity from coal, natural gas, fuel oil,
hydroelectric, nuclear, and wind resources to residential,
commercial and industrial, wholesale consumers.