Exelon Corporation EXC, with its investments in regulated utility operations for grid modernization, electric transmission and effective cost-saving efforts to better serve its customers, is expected to be a consistent performer in its industry over the long run.
However, this Zacks Rank #3 (Hold) company is exposed to risks like the failure of equipment or facilities used in delivery systems.
Tailwinds Favoring Exelon
Exelon makes significant investments in infrastructure projects, with plans to spend more than $38 billion on regulated utility operations between 2025 and 2028. The new capital expenditure represents a 10% increase over the previous plan and will be used to meet customer needs and maintain grid reliability. The company intends to invest $21.7 billion in electric distribution, $12.6 billion in electric transmission, and $3.8 billion in gas delivery between 2025 and 2028.
Systematic investments will ensure rate-based growth of about 7.4% from 2024 to 2028. The approved electric and natural gas distribution rates will increase the company's revenues and profitability.
Exelon serves more than 10 million customers in its service territories. Utility customers in its service areas benefited from tax reforms, energy efficiency programs and cost-saving measures. It continues to manage expenses efficiently, keeping costs below the rate of inflation, which benefits customers.
Headwinds Faced by Exelon
The failure of the equipment or facilities used in the delivery systems could disrupt electric transmission, as well as electric and natural gas supply, resulting in revenue losses, increased maintenance and capital expenses. Failures in equipment or facilities, particularly if the smart grid or other technologies in the service territory fail to work as intended, could disrupt uninterrupted services to customers, potentially harming financial outcomes.
Extreme weather conditions or storm damage may put a strain on transmission and distribution systems, communication systems and technologies, resulting in higher maintenance and capital expenditures and reducing each company's capacity to meet peak customer demands.
EXC Stock Price Movement
In the past six months, EXC shares have rallied 14% compared with the industry’s growth of 7.6%.
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Stocks to Consider
Some better-ranked stocks from the same industry are Fortis FTS, CenterPoint Energy CNP and NiSource Inc. NI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FTS’ long-term (three to five years) earnings growth rate is 5%. The Zacks Consensus Estimate for its 2025 earnings per share (EPS) stands at $2.47, which calls for a year-over-year jump of 3.4%.
CNP’s long-term earnings growth rate is 7.8%. The Zacks Consensus Estimate for its 2025 EPS stands at $1.75, which indicates a year-over-year rally of 8%.
NI’s long-term earnings growth rate is 7.9%. The Zacks Consensus Estimate for its 2025 EPS stands at $1.88, which implies a year-over-year rise of 7.4%.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Exelon Corporation (EXC) : Free Stock Analysis Report
NiSource, Inc (NI) : Free Stock Analysis Report
CenterPoint Energy, Inc. (CNP) : Free Stock Analysis Report
Fortis (FTS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
