We have maintained our Neutral recommendation on
Public Service Enterprise Group Inc.
) on Sep 13, 2013.
BROOKFIELD INFR (BIP): Free Stock Analysis
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INTEGRYS ENERGY (TEG): Free Stock Analysis
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Why the Reiteration?
Public Service Enterprise Group has a solid portfolio of
regulated and non-regulated utility assets that offer a stable
earnings base and substantial long-term growth potential. Despite
slow economic growth, second quarter results surpassed the Zacks
Consensus Estimate on the back of stepped-up transmission
investment, higher capacity prices and an improvement in market
prices for energy. Going forward, the low-cost nuclear fleet, and
added generating capacities will drive Public Service's earnings
The company has been taking several measures to improve its
financial stability and reduce the overall risk profile. This
includes opportunistically monetizing assets that no longer are a
strategic fit, reducing international exposure, significantly
hedging future generation business and paying down debt. The
company has also been pursuing growth opportunities in the core
U.S. market and increasing capital allocation in projects that
provide good risk-adjusted returns.
Moreover, the company's strong balance sheet and cash flows
provide substantial financial flexibility and a cushion in the
present challenging business environment. The company ended the
second quarter 2013 with total liquidity of approximately $4.46
billion. Also, the company continues to return cash to its
shareholders via common dividend payouts. Currently, the company
pays a quarterly dividend of 36 cents with a dividend yield of
Despite these positives, we remain concerned about the increasing
cost of coal, higher pension & financial costs, power-price
volatility and probable storm restoration.
Other Stocks to Consider
Public Service Enterprise Group presently retains a Zacks Rank #3
(Hold). Stocks that are worth considering in the space are
Brookfield Infrastructure Partners L.P
Integrys Energy Group, Inc.
), all with a short-term Zacks Rank #2 (Buy).