We have initiated coverage on Dominion Resources, Inc. D. The company’s growth centric projects like the construction of combined-cycle natural gas plants, heavy expansion of the midstream business and presence of green energy assets will unlock greater value for its shareholders. On the flip side, irregular weather patterns, delay in project completion and dependence on third parties for natural gas supplies are persistent concerns.
Richmond, VA-based Dominion Resources together with its subsidiaries is engaged in regulated and non-regulated electricity distribution, generation, and transmission businesses.
The company’s first-quarter 2015 earnings surpassed the Zacks Consensus Estimate while revenues lagged the mark. Both the metrics however declined year over year due to lower merchant generation margins.
Dominion Resources has a series of growth-centric projects in its pipeline which include combined-cycle facilities in Brunswick County and Greensville County, VA. The company is also heavily investing in midstream assets such as Cove Point Liquefaction and Atlantic Coast Pipeline projects which will unlock sizeable returns once they come into operation.
Dominion is also noted for its large-scale renewable generation portfolio. The company presently has several solar projects at various stages of development. These projects will help the company achieve its merchant solar portfolio target of 450 MW by 2015 and 625 MW by 2016.
On the downside, inconsistent weather patterns lead to fluctuating performance from quarter or quarter. Moreover, the company’s dependence on third parties for natural gas supply is a concern.
Zacks Rank
Dominion Resources currently has a Zacks Rank #3 (Hold). Some stocks that warrant a look in the utilities space include Enersis S.A. ENI, sporting a Zacks Rank #1 (Strong Buy), and Consolidated Edison, Inc. ED and DTE Energy Company DTE, carrying a Zacks Rank #2 (Buy).
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