DTE Energy: A diversified utility
DTE Energy Holding (DTE), Michigan’s largest electric utility, has a well-diversified business. In addition to its core utility operations, it operates non-utility segments such as pipelines, energy trading, and industrial projects. Pipelines and energy trading accounted for nearly 25% of DTE’s total operating income in 2015. The non-utility segment could be the key factor driving DTE’s growth.
DTE’s diversified business model balances its risk profile. After recognizing limited growth opportunities in the electric segment, utilities (IDU) are expanding their operations in natural gas (UNG) and the mid-stream domain.
Sempra Energy (SRE) is one such utility that’s enhancing its energy portfolio in the non-utility business. DTE Energy, a $16-billion utility, is the largest utility (FXU) in Michigan. CMS Energy (CMS) also has a significant presence in Michigan. In this series, we’ll take a look at DTE Energy (DTE) from a financial as well as investment perspective.
The above graph shows DTE Energy’s one-year stock price movement compared to its 50-day and 200-day moving averages. As of March 29, 2016, DTE is trading at 5% and 10% premium to its 50-day and 200-day moving averages, respectively. This shows that the stock’s bullish momentum could continue in the short term. Also, the upward curve of both 50-day and 200-day moving averages suggests a possible positive trend for DTE Energy.
A smart rally in DTE Energy for the last few quarters has been pushing its RSI (relative strength index) upward. Currently, it stands at 66. RSI is a momentum indicator made up of values between 0 and 100. Movements below 30 are considered in the “oversold” zone. Movements above 70 are in the “overbought” zone.