On Jul 5, 2014, Zacks Investment Research upgraded
Wisconsin Energy Corporation
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Wisconsin Energy reported positive earnings surprises in the past
four quarters with an average earnings beat of 9%. The company's
long-term expected earnings growth is pegged at 5.5%.
Wisconsin Energy is continuously adding new customers to its
portfolio. Gradual improvement in economic condition in Wisconsin,
a decline in unemployment rate and switching to natural gas from
propane increased customer count. This will likely enhance the
company's future performance.
Wisconsin Energy is focusing on upgrading and strengthening its
aging distribution infrastructure. The company intends to invest
$3.2 - $3.5 billion as capital expenditure between 2014 and 2018.
Of which, $0.71 billion is expected to be allocated under the
electricity and gas distribution projects for 2014. Wisconsin
Energy is currently in the middle of its Oak Creek expansion unit
project and started construction of a new powerhouse at the Twin
Falls hydroelectric site. These initiatives will enable the company
to meet governments' environmental regulations in terms of reducing
Wisconsin Energy inked a definitive agreement with
Integrys Energy Group, Inc.
) to acquire the latter for $9.1 billion. The combined entity will
be named WEC Energy Group, Inc. Subject to customary approvals, the
deal is expected to close in the summer of 2015. Wisconsin Energy
had a stable liquidity position, which it can utilize to fund the
As both Wisconsin Energy and Integrys Energy have similar lines of
operations and a complementary footprint, the combined entity will
be able to meet the increasing utility demand in the region.
Apart from investing in several projects, Wisconsin Energy also
utilizes funds to improve shareholder value through paying regular
dividends and pursuing an effective share repurchase program. The
board of directors has authorized management to repurchase up to an
additional $300 million of Wisconsin Energy common stock between
2014 and 2017. During the first quarter, the company paid $88.1
million as common stock dividend and repurchased shares worth $18.6
million. The company had current annual dividend yield of 3.5%,
significantly higher than the industry average.
Other Stocks to Consider
Some other stocks worth considering in the utility industry include
Alliant Energy Corporation
NRG Energy, Inc.
). Both the stocks carry a Zacks Rank #1 (Strong Buy).
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WISC ENERGY CP (WEC): Free Stock Analysis
INTEGRYS ENERGY (TEG): Free Stock Analysis
NRG ENERGY INC (NRG): Free Stock Analysis
ALLIANT ENGY CP (LNT): Free Stock Analysis
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