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Analyzing Duke Energy’s Return on Equity

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Aug. 8 2016, Published 2:04 p.m. ET

Duke Energy’s return on equity

Duke Energy’s (DUK) adjusted return on equity was near 7.7% in 2015 due to volatile earnings from international operations. It was much lower compared to the industry average.

However, management expects it to increase in 2016 since Duke completed the sale of its merchant segment to Dynegy (DYN) in 1Q15. Its exit from the Latin American generation may also reduce its earnings volatility, which may support its improving return on equity.

Peers 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 (IDU) keep as profit.

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