On Sep 30, 2013, we have reiterated our Neutral recommendation
Wisconsin Energy Corporation
). The company currently has a Zacks Rank #2 (Buy).
Why the Reiteration?
Wisconsin Energy's earnings per share in the previous quarter
were 52 cents, beating the Zacks Consensus Estimate by 5 cents
and the prior-year figure by a penny. Quarterly revenues were
$1,012.3 million, surpassing the Zacks Consensus Estimate by
$49.3 million and the year-ago figure by 7.2%. Improvement in the
top and bottom line was primarily driven by higher demand for
natural gas during a cooler-than-normal spring season.
Wisconsin Energy continues to improve and strengthen its asset
portfolio by upgrading aging distribution infrastructure,
constructing blocks and installing pipes and poles. The company
is also constructing a biomass fuel generating plant in
Rothschild and converting the fuel source for its Valley Power
Plant. Wisconsin Energy has completed a 10-year "Power the
Future" plan. These initiatives will help Wisconsin Energy to
enhance the reliability of services, which in turn will support
the company to generate adequate electricity and meet the growing
demand for power in its service territory.
Apart from a steady investment in growth projects, Wisconsin
Energy supports its shareholders to maximize wealth through
dividend payment at regular intervals. During the first six
months of 2013, the company paid dividends of $155.6 million on
On the flip side, utility providers like Wisconsin Energy's
operations are subject to federal, state, and local rules. The
regulators frequently adjust and modify existing regulations to
control pollution and waste management. Utilities incur
significant costs in order to comply with a changing regulatory
scenario, thereby putting pressure on margins.
Apart from a stable liquidity position and modern technologies, a
skilled and proficient workforce plays a significant role in the
regular operations of utility companies. We remind investors that
Wisconsin Energy's labor agreements will lapse in 2013. If the
company fails to resolve the issues with the labor unions, the
affected workers may halt work, thereby impacting performance
Other Stocks to Consider
Other stocks from the industry that are presently performing well
Brookfield Infrastructure Partners L.P.
Alliant Energy Corporation
), each with a Zacks Rank #2 (Buy).
BROOKFIELD INFR (BIP): Free Stock Analysis
ENTERGY CORP (ETR): Free Stock Analysis
ALLIANT ENGY CP (LNT): Free Stock Analysis
WISC ENERGY CP (WEC): Free Stock Analysis
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