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Utility Stocks: Reviewing Key Quantitative Insights for Investors

PART:
1 2 3
Part 3
Utility Stocks: Reviewing Key Quantitative Insights for Investors PART 3 OF 3

Short Traders: Why You Should Look at These Utility Stocks

NRG Energy

On January 11, 2017, NRG Energy (NRG) had a short interest-to-equity float ratio of 6.7%—the highest among the utility stocks that make up the Utilities Select Sector SPDR ETF (XLU).

Short Traders: Why You Should Look at These Utility Stocks

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In the past three months, NRG Energy rose 26.7%—the most among the utility stocks shown in the above table. NRG Energy’s short interest-to-equity float ratio rose 34.5% in the last three months.

NRG Energy is also the utility stock with the highest implied volatility. Its relatively high short interest could explain why it has one of the highest implied volatilities in the utilities (XLU) sector.

High short interest in a stock reflects the market’s expectations of a large fall. It can cause the implied volatility to rise. NRG Energy’s cash and cash equivalents were $1.5 billion in 3Q16.

SCANA

SCANA’s (SCG) short interest-to-equity float ratio is 3.9%. In the last three months, the stock rose 4.6%, while its short interest-to-equity float ratio was unchanged. SCANA’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is 4.9x. Its cash and cash equivalents were $176 million in 3Q16.

WEC Energy

WEC Energy’s (WEC) short interest-to-equity float ratio is 3.9%. In the last three months, the stock rose 3.6%, while its short interest-to-equity float ratio rose 4.9%. WEC Energy’s net debt-to-EBITDA ratio is 4x. Its cash and cash equivalents were $49.8 million in 3Q16.

NiSource

NiSource’s (NI) short interest-to-equity float ratio is 3.8%. Its net debt-to-EBITDA ratio is 5.6x. NiSource’s cash and cash equivalents were $15.5 million in 3Q16. In the last three months, the stock fell 1.2%, while its short interest-to-equity float ratio rose 40.4%. NiSource is also one of the high implied volatility utility stocks discussed in Part 1 of this series.

Consolidated Edison

Consolidated Edison’s (ED) short interest-to-equity float ratio is 3.3%. Its net debt-to-EBITDA ratio is 4.1x. Consolidated Edison’s cash and cash equivalents were $944 million in 3Q16. The stock rose 1.9% in the last three months, while its short interest-to-equity float ratio fell 9.7%.

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