Duke Energy’s DUK focus to generate more electricity from renewable energy sources, solid investment plans and stable financial position will boost its performance in the long term.
This Zacks Rank #2 (Buy) utility is a promising bet at the moment, courtesy of consistent customer growth, focus on modernizing infrastructure and initiatives to boost shareholders’ value.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2019 earnings per share (EPS) is pegged at $4.98 on $24.96-billion revenues. The bottom and the top line are expected to rise 5.5% and 1.8% year over year, respectively.
The consensus mark for 2020 EPS is pegged at $5.14 per share on revenues of $25.67 billion. This calls for 3.1% and 2.8% year-over-year increase in the bottom and the top line, respectively.
Its long-term (three to five years) EPS growth is projected at 4.88%. Duke Energy pulled off a positive average earnings surprise of 4.75% in the last four quarters.
Strong Investment Plans
Per its five-year capital plan, the company intends to invest nearly $37 billion in its overall growth projects during the 2019-2023 period. The plan will drive earnings in the combined electric and gas businesses by approximately 6%.
Duke Energy is undertaking efforts to expand its scale of operations and implement modern technologies by investing in infrastructure and expansion projects. Segment-wise, it expects to spend $28.5 billion in electric utilities and infrastructure, $5.9 billion in gas utilities and infrastructure as well as $2.6 billion in commercial renewables in the 2019-2023 period.
Focus on Renewables
To promote environmental sustainability, Duke Energy is continuously expanding its renewable asset base. With respect to its commercial renewables business, the company continued to expand its wind and solar energy portfolio in 2018. In the same year, the company installed nearly 2,900 megawatt (MW) across 14 states, comprising 21 wind and 64 solar facilities. During the second quarter, the company announced new wind, solar and fuel cell projects with a total capacity of 650 MW.
Duke Energy now expects to lower emission from electricity generation by 50% in 2030 and 100% by 2050 from 2005 levels. The company’s efforts to add more renewable and clean sources in its production portfolio will enable it to achieve target.
Price Performance & Consistent Dividend
Shares of Duke Energy have increased 20.3% on a year-over-year basis compared with the industry’s rise of 17.2% and Zacks S&P 500 composite’s 1.1%.
Price Performance (One Year)
Duke Energy has been paying dividends to shareholders for the past nine. Currently, its dividend yield of 3.94% is better than the industry’s 2.82% and Zacks S&P 500 composite's 1.89%.
Other Stocks to Consider
Some other top-ranked stocks from the same space are American Electric Power Company AEP, NRG Energy NRG and Alliant Energy Corporation LNT. While American Electric Power and Alliant Energy Corporation hold a Zacks Rank #2, NRG Energy sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
NRG Energy’s long-term earnings growth is projected at 36.26%. The Zacks Consensus Estimate for 2019 EPS has moved up 9.1% in the past 90 days to $4.08.
Alliant Energy’s long-term earnings growth is projected at 5.5%. The Zacks Consensus Estimate for 2019 EPS has moved up 0.4% in the past 90 days to $2.26.
American Electric Power’s long-term earnings growth is projected at 5.6%. The Zacks Consensus Estimate for 2019 EPS has moved up 0.2% in the past 90 days to $4.14.
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