We retain our Neutral recommendation on
Xcel Energy Inc.
). The Western and Midwestern utility service provider currently
carries a Zacks Rank #3 (Hold).
Why the Reiteration?
Xcel Energy posted favorable earnings and revenue numbers in
the first quarter 2013 compared with the year-ago quarter.
Both revenues and earnings moved up 8% and 26.8% year over year,
respectively from prior-year levels.
Going forward, its request for proposals for expansion of
green generation in the states of Texas, Colorado, New Mexico and
Upper Midwest territories will allow Xcel to offer affordable
clean energy services to its customers. Xcel Energy's renewable
initiatives are also a step ahead with the company achieving a
generating capacity of 1 billion kilowatt-hours of wind energy in
On the flip side, the soft economic fundamentals in the U.S.
are still weighing on the company's profitability. The
possibility of turbulent weather conditions owing to the
prediction of strong hurricanes in the period June to Nov 2013,
as per the National Oceanic Atmospheric Administration (NOAA),
could also pose difficulties.
Xcel Energy's several transmission projects under the CapX2020
program are advancing well, which will act as key growth drivers
in the future.
Nevertheless, stringent regulatory laws will continue to
present cost challenges for Xcel Energy.
Other Stocks to Consider
Considering the pros and cons, we retain a cautious stance on
Xcel Energy. However, other utilities presently looking good are
Zacks Ranked #2 (Buy)
DTE Energy Company
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