On Apr 17, we have issued an updated research report on
Xcel Energy Inc.
). The U.S. utility company continues with its strategic
investments to expand operations besides adding renewable assets.
However, stringent government regulations and rising operating
expenses might challenge the company's future results.
Xcel Energy, a Zacks Rank #2 (Buy) stock, reported a stable
performance in fourth-quarter 2013. The company's top as well as
bottom line surpassed the Zacks Consensus Estimate. Quarterly
results also increased year over year, primarily on the back of a
reduction in total interest charges and financing costs, rate
hike at several of its service territories, and the favorable
impact of colder weather on its natural gas business.
We appreciate Xcel Energy's consistent efforts to expand its
existing infrastructure. The company plans to invest around $14.1
billion in the next five years.
We note that Xcel Energy continues to add electricity and natural
gas customers. This trend is expected to continue in the future
due to lower unemployment rates and a booming oil and gas
Xcel Energy is currently pursuing several initiatives to cope
with increasing customer demand. The company has already
installed 230-Kilovolt (Kv) of transmission line in Minnesota and
is constructing three 345-Kv transmission lines. The scheduled
completion of these projects will enable the company to increase
its service capacity.
In addition, Xcel Energy is focusing on expanding its renewable
properties, primarily its wind and solar assets. In 2016, the
company plans to add 1,900 megawatts (MW) of wind power and
produce electricity from nine new farms in its portfolio. Xcel
Energy submitted proposals to the regulators to add up to 150 MW
of solar assets at its Upper Midwest service area by 2016. These
initiatives will enable the company to diversify its generation
portfolio besides meeting the government's renewable mandates.
We remind investors that Xcel Energy has a favorable liquidity
position. As of Jan 28, 2014, the company had available liquidity
of around $1.25 billion, including $3.4 million of cash and the
balance available under its credit facilities. A favorable
financial positon supports Xcel Energy's systematic capital
Xcel Energy's operations are however subject to federal, state,
and local legislative requirements. Changes in environmental
regulations could impact the company's financial results.
Key Picks from the Sector
Some other stocks looking good in the utilities industry include
NRG Energy, Inc.
Public Service Enterprise Group Inc.
). While NRG Energy and Public Service Enterprise carry a Zacks
Rank #1 (Strong Buy), ALLETE holds a Zacks Rank #2 (Buy).
ALLETE INC (ALE): Free Stock Analysis Report
NRG ENERGY INC (NRG): Free Stock Analysis
PUBLIC SV ENTRP (PEG): Free Stock Analysis
XCEL ENERGY INC (XEL): Free Stock Analysis
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