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Dominion Resources Stock Approaches Peak: What's Next?

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Dominion Resources Stock Approaches Peak: What's Next? PART 1 OF 6

Dominion Resources Stock Approaches Peak: What’s Next?

Dominion marches towards new highs

Dominion Resources (D) continues to look interesting from an investor’s perspective as the stock approaches multiyear highs. Currently, it’s trading ~1.5% below its previous five-year high of $79.30 in December 2014. The stock has done fairly well in the last several months barring a few temporary drops.

Dominion Resources posted strong quarterly earnings growth in 4Q16, but issued gloomy guidance for 2017.

Dominion Resources Stock Approaches Peak: What&#8217;s Next?

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2017 gloomy for Dominion?

Dominion Resources has given a 2017 earning guidance range of $3.40–$3.90 per share. Its 2016 earnings stood at $3.80 per share. Based on the midpoint of the guidance range, Dominion’s earnings per share in 2017 are expected to be ~4% lower.

However, it should be noted that the poor outlook for 2017 might not be that negative for Dominion Resources and its investors. The company noted that its expected earnings in 2018 are projected to have “at least” 10% growth year-over-year. From 2018 to 2020, Dominion Resources’s earnings are expected to rise 6%–8% compounded annually, which is higher than the industry average.

Market performance

In the last three months, Dominion Resources managed to gain nearly 3%, while the Utilities Select Sector SPDR (XLU) rose 6%. During the same period, the SPDR S&P 500 ETF (SPY) (SPX-INDEX) rose 5%. The utilities sector forms nearly 3.2% of SPY. Dominion’s peers Duke Energy (DUK) and NextEra Energy (NEE) rose 6% and 10%, respectively.

The above chart compares the performance of Dominion Resources, XLU, and SPY over a one-year period.

In the next part, we’ll see how Dominion stock looks in the short term.

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