We upgraded our recommendation on the diversified holding
Wisconsin Energy Corporation
), to Outperform from Neutral. In the last three consecutive
quarters, the company's earnings per share surpassed the Zacks
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WISC ENERGY CP (WEC): Free Stock Analysis
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Reasons for Outperform
Wisconsin Energy recently completed its 10-year "Power the
Future" (PTF) plan, worth $3 billion. This program deals with
improvement of existing generation and distribution assets. We
consider this program as a strong future earnings
Currently, Wisconsin Energy realigned its capital spending
strategy. The company shifted its focus to small projects and
improvement of existing distribution facilities from large
renewable generation and air quality control ventures.
The company is in the middle of its two important projects: a
biomass fuel generating plant and an air quality control project.
We believe completion of these two projects and PTF program will
enable the company to increase its emission-free power generation
capacity and comfortably meet increasing energy demand of the new
Wisconsin Energy still follows its inorganic expansion strategy.
In November 2012, the company signed joint-ownership and air
quality control agreements with Wolverine Power Cooperative. Per
the contract, Wolverine will get a minority interest in the
facility and will offer funding-assistance to the company. We
believe that such tie-ups will enable Wisconsin Energy to improve
its operational and financial performance in the future.
However, over-reliance on seasonal patterns, and compliance with
current and future legislations might escalate operating
expenses, which will likely weigh on the company's future
profitability. The company currently has a short-term Zacks #3
Riding on the strong positives, the Zacks Consensus Estimates for
full-year 2012 earnings per share currently stands at $2.32,
reflecting a year-over-year growth of 6.4%.
Other Stocks to Consider
Besides Wisconsin Energy Corporation, other stocks in the utility
sector that are currently performing well include
Pike Electric Corporation
Huaneng Power International, Inc.
). Both Pike Electric and Huaneng Power presently carry a
short-term Zacks #1 Rank (Strong Buy).
Milwaukee, Wisconsin-based Wisconsin Energy Corporation engages
in generation and distribution of electricity in southeastern,
east central, and northern Wisconsin, and Upper Peninsula of