On Apr 10, 2013, shares of
NV Energy Inc.
) hit a 52-week high of $21.24. NV Energy registered positive
earnings surprises in three of the last four quarters, with an
average beat of 44.47%.
In 2012, the company reported strong results, with earnings of
$1.35 per share increasing 95.6% from the 2011 level. Favorable
earnings resulted from positive rate changes and lower interest
expense partially offset by mild weather conditions.
The company continues to make strategic investments to strengthen
its generation and transmission capabilities. NV Energy will make
capital investment of $520 million in 2013 and follow it up with
investments of more than $400 million per year from 2014 through
2017. This expenditure will further boost its low cost
clean generation assets.
A major portion of NV Energy's generation comes from natural gas
sources thereby lowering its environment compliance expenditures.
The company projects an annual increase in the customer count by
1.2% in 2013 and a decline in interest expenses due to repayment
of debts. We believe all these will lead to higher profits for
Further, NV Energy's decision to provide smart meters for its
customers will increase customer convenience. This new meter
system will also allow the company to launch new customer
programs. We believe this will not only enable NV Energy to
retain but also expand its customer base.
We expect long-term earnings growth of 11.07%. The Zacks
Consensus Estimate for first quarter 2013 is 8 cents reflecting
year-over-year growth of 64%.
The present valuation reflects that the shares of the company are
trading at a discount compared to its peers. Shares of NV Energy
Inc. currently trade at 16.25x 12-month forward earnings, a 0.8%
discount to the peer group average of 16.38x. Its price-to-book
ratio of 1.39 is at an 11.46% discount to the peer group average
The company has consistently paid dividends to its shareholders.
The Board of Directors has approved an 11.8% increase to the
quarterly dividend to 19 cents in Feb 2013. The new annualized
dividend rate of the company comes to 76 cents. This results in a
dividend yield of 3.6%, higher than the industry average of
2.56%. The company has been increasing its payout every year
NV Energy currently carries a Zacks Rank #2 (Buy). We also prefer
other utilities like
Brookfield Infrastructure Partners L.P.
Empresa Nacional de Electricidad S.A.
Huaneng Power International, Inc.
), all carrying a Zacks Rank #1(Strong Buy).
Based in Las Vegas, Nev., NV Energy was founded in 1906. The
majority of the company's electricity is generated from natural
gas. With a market cap of $4.95 billion the company has 2,699
full time employees.
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