Energy holding company, SCANA Corporation (SCG) announced that it has decided to redeem in advance of maturity its $150 million of 2009 Series A, 7.70% Enhanced Junior Subordinated Notes. The entire outstanding principal amount of the notes are being called for redemption on Feb 2, 2015 at a price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest through, but not including, the redemption date.
The company reported strong financial results for the third quarter of 2014 with both the top and the bottom line beating the Zacks Consensus Estimate. The upside came from weather-related electricity sales, along with customer growth and rate base hikes.
SCANA’s nuclear expansion project is a catalyst for future earnings growth. Given SCANA’s financing plan, construction budget and schedule, we expect it to fund its nuclear expansion project. Management is hopeful of meeting its projected 2014 earnings of $3.45–$3.65 per share on industrial expansion and continued customer growth. As the company's capital expenditure escalates with new nuclear projects and its investments are recognized in the rate base, the regulated earnings power is expected to improve.
SCANA is well positioned in a positive regulatory environment, and has a low-risk business with outstanding customer growth and operational efficiency. These in turn favor stable cash flow generation and growth. Another positive for the company’s shareholders is its utility business mix. Most of the company’s total earnings come from the regulated electricity and natural gas utilities business.
Columbia, SC-based SCANA’s operations include generation, transmission, distribution and sale of electricity to retail and wholesale customers within the state. The company also purchases, sells and transports natural gas to retail customers; provides energy-related risk management services; and acquires, owns and provides financing for nuclear fuel, fossil fuel and emission allowances.
SCANA currently carries a Zacks Rank #3 (Hold). Better-ranked energy sector stocks include Spectra Energy Partners, LP (SEP), Exterran Holdings, Inc. (EXH) and Enbridge Energy Management LLC (EEQ). All these currently sport a Zacks Rank #1 (Strong Buy).
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