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Duke Energy Expects Improved Return on Equity in 2016

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Duke Energy’s return on equity

Duke Energy’s (DUK) adjusted return on equity stayed near 7.7% in 2015 due to volatile earnings from international operations. It was on the lower side of the industry average. However, management expects it to increase in 2016 since Duke completed the sale of its merchant segment to Dynegy in 1Q15. Its exit from the Latin American generation segment may also reduce its earnings volatility. This bodes well for improving the return on equity.

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Peers such as Southern Company (SO) and NextEra Energy (NEE) had higher returns on equity at more than 12% in 2015.

Return on equity is authorized by regulators. It’s the only part of revenue requirements that utilities keep as profit.

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