We reiterate our Neutral recommendation on
Xcel Energy Inc.
). The company is a frontrunner in the utility industry providing
environmentally friendly efficient energy solutions to its
customers in the U.S.
The company keeps track of its growth momentum by reinvesting
capital in infrastructural assets like transmission lines and
electric poles. Besides, it constantly upgrades safety measures at
its nuclear plant facilities to avoid unmitigated disasters. The
company is also investing in renewable energy sources, especially
wind, to diversify its portfolio and meet fresh renewable energy
Xcel Energy's financial results are subject to irregular weather
patterns that influence the demand for electricity and natural gas.
A mild winter in the first quarter 2012 affected the profitability
of the company. Moreover, stringent environmental regulations
undermine the company's utility operations.
Other negatives that will keep the Xcel stock under a tight
leash are uncertain outcomes on pending rate cases, commodity price
volatility and supply bottlenecks associated with non-fulfillment
of contractual obligations from third parties.
Xcel Energy Inc.
's operating earnings for the first quarter of 2012 of 41 cents per
share were down 0.04 cents from the year-ago quarter. It modestly
surpassed the Zacks Consensus Estimate by 0.04 cents per share.
The Zacks Consensus Estimates for the second quarter and 2012
are currently pegged at 34 cents and $1.78, respectively. For 2012,
the company anticipates earnings to come in at the low end of the
$1.75-$1.85 per share range.
Xcel Energy currently retains a Zacks #3 Rank which translates
into a short-term Hold rating. The company's peers include
American Electric Power
Based in Minneapolis, Minnesota, Xcel Energy is a U.S.
electricity and natural gas company, with operations in eight
Western and Midwestern states. Along with its subsidiaries, the
company is involved in the generation, purchase, transmission,
distribution, and sale of electricity in the United States.
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