Duke Energy CorporationDUK announced that it has sold its international business in Brazil to China Three Gorges Corp. for $1.2 billion. This decision was a part of Duke Energy's strategy to completely exit Latin American operation and focus more on its core regulated domestic operations.
Apart from Brazilian assets, Duke Energy also announced the sale of its remaining Latin American assets - in Peru, Chile, Ecuador, Guatemala, El Salvador and Argentina - to I Squared Capital in Oct 2016. The I Squared Capital sale was completed on Dec 20, 2016. The entire Latin American assets sale is expected to fetch $1.9 billion for the company, which will be utilized to lower its existing debt level.
Expansion of Regulated Business
Duke Energy's decision to sale Latin American assets was a part of the company's strategy to focus on its domestic operations. Duke's domestic regulated business was boosted by the acquisition of Piedmont Natural Gas Co. Inc. for $6.7 billion. The acquisition added 1 million natural gas customers to Duke Energy's existing customer base.
The company has undertaken several projects and plans to invest in the range of $25 billion to $30 billion in growth projects over the 2016-2020 period. It must be noted that the company expects to make capital investment of $9.225 billion in 2016, $8.8 billion in 2017 and $8.3 billion in 2018. The company also expects investments to support its targeted earnings growth rate of in the band of 4-6% through 2020.
Over the last one year, Duke Energy has been outperforming the Zacks categorized Utility- Electric Power industry. During this period, the company's shares have gained 9.3%, compared with the industry's return of 4.7%.
Duke Energy's stable regulated operations, the Piedmont Natural Gas acquisition, renewable asset expansion and organized transition toward a more focused business mix is expected to boost the performance of the company in the long run.
Zacks Rank & Other Key Picks
Duke Energy currently has a Zacks Rank #3 (Hold). Some better-placed stocks in the same space include Ameren Corporation AEE , SCANA Corporation SCG and DTE Energy Co. DTE , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Ameren's earnings surpassed the Zacks Consensus Estimate by 10.1% in the last reported quarter. For 2016, estimates improved 6.3% to $2.70 over the last 60 days.
SCANA Corporation's earnings beat the Zacks Consensus Estimate by 25.7% in the last reported quarter. Its 2016 estimates improved 1.2% to $4.15 over the last 60 days.
DTE Energy's earnings surpassed the Zacks Consensus Estimate by 27.3% in the last reported quarter. Its 2016 estimates improved by a penny to $5.27 over the last 60 days.
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