Dominion (D) Adds Green Energy Assets, Regulations a Risk

On Feb 6, we issued an updated research report on Dominion Resources Inc.D . Dominion's dependence on third parties for natural gas supply and risks associated with the completion of ongoing projects within budget and on schedule are some of the major headwinds. However, focus on regulated assets and expansion of renewable generation assets will boost its performance over the long term.

Dominion's fourth-quarter 2016 operating earnings and revenues lagged the Zacks Consensus Estimate. The bottom line was, however, within management's guidance range of 90 cents to $1.10 per share.

In 2017, Dominion's operating earnings are expected to be impacted by lower Cove Point import contract revenues, the second Millstone refueling outage, lower hedged power prices at Millstone, and share dilution.

Currently, several expansion projects including pipelines, electric transmission lines, and conversion and other infrastructure projects are under various stages of development. If the company fails to obtain the necessary approvals or allocate and coordinate sufficient resources or if projects get delayed for completion, it may have a material impact on the company's financials.

Dominion has emerged as a big name backed by its large-scale renewable and clean energy generation portfolio. These projects will allow the company to reap the benefit of solar-related investment tax credits and enhance its renewable operating fleet to 1,400 MW by end of 2017. In 2016, Dominion added 727 MW to its existing solar portfolio.

In 2016, the company started operating six major pipeline expansion projects, adding nearly 1.2 billion cubic feet per day of capacity. Going forward, the company plans to add another six pipelines project in its portfolio. New pipeline projects are expected to add 900 million cubic feet per day by end of 2018.

Price Movement

Shares of the company have underperformed the broader industry in the last three months. Shares of Dominion lost 4.4% in the last three months, compared with the 0.6% decline registered by the Zacks categorized Utility - Electric Power industry.

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Dominion Resources currently has a Zacks Rank #4(Sell). Some better-ranked stocks in the utility sector are Exelon Corporation EXC , Ameren Corporation AEE and NextEra Energy Inc. NEE . All of them carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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