We have maintained our Neutral recommendation on a utility provider Wisconsin Energy Corporation ( WEC ). The company currently has a Zacks Rank #2 (Buy).
Why the Reiteration?
In first-quarter 2013, Wisconsin Energy's earnings per share and revenues surpassed the Zacks Consensus Estimates and year-ago results. The encouraging results were mainly due to a rise in electricity consumption by residential, small commercial and industrial customers, strong contributions from We Power operations and positive impacts from the share repurchase program.
Wisconsin Energy successfully completed its 10-year "Power the Future" (PTF) plan. Under the program, the company spent $3 billion to construct 2,320 megawatts generating capacity, and upgrade the existing generation and distribution assets. We believe that this program will act as strong future earnings generator.
In addition, Wisconsin Energy intends to spend $3.2 billion to $3.5 billion in the next five years to upgrade its transmission and distribution infrastructure. These initiatives will enhance the reliability of the company's services that will support it in transmitting sufficient electricity, thereby meeting the increasing demand for power in its service areas.
The solid performance and financial strength allow Wisconsin Energy to help its shareholders in terms of maximizing their wealth through dividend payment at regular intervals. The company paid $77.8 million as dividend during the first three months of 2013 ended Mar 31, 2013.
However, stringent utility regulations, risk related to the timely completion of several small projects and volatile commodity pricing could weigh on its forthcoming performance.
Other Stocks to Consider
The other stocks in the industry that are worth considering include CPFL Energia S.A. ( CPL ) and Companhia Paranaense de Energia ( ELP ) with a Zacks Rank #1 (Strong Buy), and ALLETE, Inc. ( ALE ) with a Zacks Rank #2 (Buy).