On Jan 16, 2014, we have updated the research report on Xcel Energy Inc. (XEL). The company’s disciplined investments in infrastructure projects are expected to boost future performance. Focus on adding renewables will help the company achieve its target of curbing carbon emissions. However, rising operating costs and tighter environmental legislations might limit the company’s profitability.
Minneapolis, MN-based Xcel Energy continues to invest substantially in its utility assets to provide reliable services to its customers and effectively meet rising electricity demand. The company’s capital outlay from 2015 through 2019 is set at roughly $14.5 billion of which a large part is directed toward transmission and natural gas.
This Zacks Rank #2 (Buy) company is currently diversifying its generation portfolio with emphasis on renewable sources. The company has already reduced carbon dioxide emissions during power generation by around 20% since 2005.
Xcel Energy has set a target of adding 600 MW of wind energy to its portfolio by 2020 and 187 MW of large-scale solar energy by the end of 2016. These ventures will further aid the utility in reducing carbon emissions from its electricity generation plants.
Moreover, positive economic fundamentals across Xcel Energy’s service territories are an added encouragement. The consolidated unemployment rate at its service territory is lower than the national average.
On the downside, unfavourable regulatory outcome, changes in weather pattern and stricter environmental laws still pose a threat to the company’s operations.
Other stocks
Other well-ranked stocks in the electric utility space include Huaneng Power International, Inc. (HNP), sporting a Zacks Rank #1 (Strong Buy) and PG&E Corporation (PCG) and TECO Energy, Inc. (TE), carrying a Zacks Rank #2.
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