Strong Buy on NV Energy

Strong Buy on NV Energy

On Jul 27, Zacks Investment Research upgraded NV Energy, Inc. (NVE) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

This diversified utility delivered positive earnings surprises in the last four quarters with an average beat of 14.04%.The long-term sales growth of the company is presently pegged at 3.83%.

NV Energy Inc.’s second quarter earnings of 31 cents surpassed the Zacks Consensus Estimate of 25 cents by 24%. Earnings were 6.9% higher than the comparable year-ago period due to increase in usage, growth in the customer base and a decline in interest expenses.

During the second quarter the company entered into a definite agreement with MidAmerican Energy Holdings Company, a subsidiary of Berkshire Hathaway Inc. (BRK.A). Per the agreement, the Berkshire Hathaway unit will take over NV Energy – the transaction already being approved by the Board of Directors of both companies. This merger will lend NV Energy additional resources and the financial strength to expand its operations. The transaction is expected to close in the first quarter of 2014, subject to the approval of NV Energy’s shareholders and other regulatory go-aheads.

A consistent performance from NV Energy allows it not only to pay regular dividends but also to increase the quarterly rate. In Feb 2013, the company raised its quarterly dividend rate by 12% to 19 cents per share. The current dividend yield of the company is 3.22%, higher than the industry average of 2.05%.

Other Stocks to Consider

Besides NV Energy, Integrys Energy Group, Inc. (TEG) and Companhia Paranaense de Energia (ELP) have a favorable Zacks Rank among others operating in the industry. Both these companies presently carry a Zacks Rank #1 (Strong Buy).

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