On Mar 17, 2014, the shares of
Wisconsin Energy Corporation
) climbed to its 52-week high of $45.87. The share price was
finally closed at $45.66, up 0.8% from the previous day's
closing. We believe that the company's favorable fourth-quarter
2013 results, payment of increased dividend, a rise in 2014
capital spending program and higher number of electricity and
natural gas customers in 2013 than the year-ago level, led to the
surge in share price.
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In the fourth quarter of 2013, Wisconsin Energy's operating
earnings of 63 cents per share surpassed the Zacks Consensus
Estimate by 8.6%. The results were also ahead of the year-ago
quarter's operating earnings of 43 cents by 46.5%. Improvement in
earnings was primarily driven by colder winter temperatures,
lower property and revenue taxes and decreased share counts. The
company's earnings surpassed the Zacks Consensus Estimates in the
last 4 quarters, with an average surprise of 8.4%.
Wisconsin Energy's initiatives including distributing incremental
dividends and share repurchase program will help to improve
shareholders' value. On Mar 1, 2014, Wisconsin Energy paid
quarterly dividend of 39 cents per share on the company's common
stock, up around 2% from the previous payout of 38.25 cents per
share. As far as Wisconsin Energy's share repurchase plan in
concerned, the company repurchased roughly 3.0 million shares for
$126 million in 2013.
We note that the company continues to show its efficiency in
improving its operating cash flow. In 2013, the company's cash
flow from operating activities climbed around 4.9% to roughly
$1.23 billion from $1.17 billion in the year-ago comparable
period. Strong cash generation efficiency supports the company's
We appreciate Wisconsin Energy's steady effort towards improving
and modernizing its utility infrastructure. The company plans to
invest $3.2-$3.5 billion in its several ventures within a time
span of 2014 to 2018. Of which, around $0.71 billion is expected
to be invested in 2014. As Wisconsin Energy continues to increase
customer counts, we believe 3.4% anticipated year-over-year
growth in capital expenditure will enable the company to provide
reliable services to higher number of customers.
Apart from upgrading infrastructure, Wisconsin Energy is also
diversifying its power generation portfolio and expanding its
renewable properties. In Nov 2013, the company completed its
biomass project in Rothschild. Subsequently, these initiatives
will enable the company to maintain governments' renewable
standard for electricity generation.
Wisconsin Energy currently has a Zacks Rank #2 (Buy). Some other
stocks looking equally good in the utilities industry include
Public Service Enterprise Group Inc.
). While Public Service Enterprise and Exelon hold a Zacks Rank
#1 (Strong Buy), Avista Corporation carries a Zacks Rank #2