Xcel Energy’s XEL disciplined investments in infrastructure projects and focus on renewable expansion will act as growth catalysts in the long term.
Retaining this Zacks Rank #3 (Hold) stock in your portfolio now is a good idea, given the following positive factors.
Positive Growth Projections: The Zacks Consensus Estimate for earnings is $2.31 on revenues of $11.76 billion for 2017. The bottom line reflects a 4.47% year-over-year rise and the top-line projection is 5.85% higher. For 2018, the Zacks Consensus Estimate for earnings is pegged at $2.46 on revenues of $12.09 billion. While earnings represent a 6.5% rally, revenues reflect a 2.8% rise.
Xcel Energy has long-term expected earnings per share growth rate of 5.4%.
Strong Return: Xcel Energy’s shares have rallied 18.8% in the last 12 months, outperforming the industry’s gain of 7.1%.
Earnings Surprise: The company surpassed the Zacks Consensus Estimate in three of the last four quarters with an average beat of 1.09%.
Growth Drivers
Xcel Energy’s long-term capital expenditure will be $18.4 billion (for 2017 through 2021). It is directed toward transmission, distribution, electric generation and renewable projects. Sizeable investments are expected to drive rate base growth of 5.5% compounded annually, thereby aiding the top line.
Xcel Energy is working on its steel-for-fuel initiative and executing plans to add nearly 3,400 MW of new wind to its systems by the end of 2020. Out of the total wind proposal, the commission has already approved 1,150 MW of its new wind generation proposal. The company is on track to lower its emission level by 45% by 2021.
The sign of economic improvement is prominent across Xcel Energy’s service territories, especially in Minnesota, compared to the nation as a whole. The consolidated unemployment rate in the company’s service territory was 2.7% in June 2017, lower than the national average of 4.4%. The company witnessed 0.9% year-over-year increase in electric customer during the second quarter.
Stocks to Consider
Some better-ranked stocks in the sector are CenterPoint Energy Inc. CNP, IDACORP Inc. IDA and Fortis Inc. FTS. All stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CenterPoint Energy reported positive earnings surprises in three out of last four quarters with an average surprise of 10.34%. Its 2017 Zacks Consensus Estimate moved up 1.6% to $1.31 in last 60 days.
IDACORP Inc. reported positive earnings surprises in three of last four quarters with an average surprise of 6.14%. Its 2017 Zacks Consensus Estimate moved up a penny to $4 in last 60 days.
Fortis Inc. reported positive earnings surprises in three out of last four quarters with an average surprise of 10.99%. Its 2017 Zacks Consensus Estimate moved up 5.4% to $1.95 in last 60 days.
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