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NEE, SO, and DUK: A Look at US Utilities’ Return on Equity

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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 rise 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, which bodes well for a better 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 and in 2016 so far. The industry average ROE is near 10%.

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