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Teco and Northeast bleed, dragging power utilities down

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Biggest loser

Among power utilities, Teco Energy (TE) saw the biggest drop in share prices for the week ended February 13, 2015. Teco share prices fell by 7.0% in the week.

A weaker-than-expected earnings release led to a fall in Teco’s share prices last week. Teco Energy’s adjusted earnings were down by 80% in the fourth quarter of fiscal 2015 year-over-year. Teco Energy offers one of the highest dividend yields in the power utilities sector.

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Other losers for the week

Northeast Utilities (NU) was the second-biggest loser in the power utilities sector, after Teco, losing 5.0% during the week. Northeast Utilities stock has been under pressure since the company released its fourth-quarter results on February 11, 2015.

Apart from Teco and Northeast Utilities, Idacorp (IDA) and Southern Company (SO) were the other major losers for the week ended February 13, 2015. Idacorp and Southern were down by 4.8% each during the week.

Broader markets

The power utilities sector underperformed the broader US markets for the week ended February 13, 2015. The US power sector and the broader US markets moved in divergent directions. The Utilities Select Sector SPDR (XLU) fell by 3.0% in the week, while the SPDR S&P 500 ETF Trust (SPY) gained 2.1% in the week.

XLU was one of the best-performing sectors in 2014. It outperformed SPY. However, XLU has been lagging SPY in terms of returns. The earnings of many power companies have disappointed in 4Q14. They have yet to catch up with Wall Street expectations. This has resulted in a sell-off for the sector in recent weeks.

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