On Apr 10, 2013, shares of NV Energy Inc. (NVE) hit a 52-week high of $21.24. NV Energy registered positive earnings surprises in three of the last four quarters, with an average beat of 44.47%.
In 2012, the company reported strong results, with earnings of $1.35 per share increasing 95.6% from the 2011 level. Favorable earnings resulted from positive rate changes and lower interest expense partially offset by mild weather conditions.
The company continues to make strategic investments to strengthen its generation and transmission capabilities. NV Energy will make capital investment of $520 million in 2013 and follow it up with investments of more than $400 million per year from 2014 through 2017. This expenditure will further boost its low cost clean generation assets.
A major portion of NV Energy’s generation comes from natural gas sources thereby lowering its environment compliance expenditures. The company projects an annual increase in the customer count by 1.2% in 2013 and a decline in interest expenses due to repayment of debts. We believe all these will lead to higher profits for the company.
Further, NV Energy’s decision to provide smart meters for its customers will increase customer convenience. This new meter system will also allow the company to launch new customer programs. We believe this will not only enable NV Energy to retain but also expand its customer base.
We expect long-term earnings growth of 11.07%. The Zacks Consensus Estimate for first quarter 2013 is 8 cents reflecting year-over-year growth of 64%.
The present valuation reflects that the shares of the company are trading at a discount compared to its peers. Shares of NV Energy Inc. currently trade at 16.25x 12-month forward earnings, a 0.8% discount to the peer group average of 16.38x. Its price-to-book ratio of 1.39 is at an 11.46% discount to the peer group average of 1.57.
The company has consistently paid dividends to its shareholders. The Board of Directors has approved an 11.8% increase to the quarterly dividend to 19 cents in Feb 2013. The new annualized dividend rate of the company comes to 76 cents. This results in a dividend yield of 3.6%, higher than the industry average of 2.56%. The company has been increasing its payout every year since 2008.
NV Energy currently carries a Zacks Rank #2 (Buy). We also prefer other utilities like Brookfield Infrastructure Partners L.P. (BIP), Empresa Nacional de Electricidad S.A. (EOC) and Huaneng Power International, Inc. (HNP), all carrying a Zacks Rank #1(Strong Buy).
Based in Las Vegas, Nev., NV Energy was founded in 1906. The majority of the company’s electricity is generated from natural gas. With a market cap of $4.95 billion the company has 2,699 full time employees.
BROOKFIELD INFR (BIP): Free Stock Analysis Report
ENDESA-CHILE (EOC): Free Stock Analysis Report
HUANENG POWER (HNP): Free Stock Analysis Report
NV ENERGY INC (NVE): Free Stock Analysis Report
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