According to analysts’ estimates, Xcel Energy (XEL) has a one-year median price target of $42.71. It implies an upside of 5% in one year from its current market price of $40.67. The following chart shows analysts’ views on Xcel Energy as of December 22, 2016. Currently, there are 14 analysts tracking Xcel Energy. None of the analysts recommend Xcel Energy as a “sell.”
According to analysts’ estimates, Duke Energy (DUK) has a one-year median price target of $80.41. It implies an upside of 3.4% in one year from its current market price of $77.77. PPL Corporation (PPL) has a one-year price target of $36. It implies an upside of 4.5% in one year from its current market price of $34.46.
Xcel Energy is attempting to increase its earnings by minimizing regulatory lag. Regulatory lag is the delay in the recovery of investments occurred due to the time it takes regulators to approve rates. Xcel Energy is trying to settle multiyear rate cases, which offer regulatory certainty and diminish regulatory lag.
Improved earnings might bode well for stable dividends (DVD) in the future. Xcel expects an increase of 5%–7% in annual dividend distributions with a target payout ratio of 60%–70% for the next few years.
After raising its benchmark interest rates in December 2016, the Fed expects to deliver three quarter-point rate rises in 2017—up from its expectation of two in its September 2016 meeting. It could be a concern for utility companies and their investors going forward. A higher cost of capital could dent their profitability.
Read A Look at Utilities’ Rate Cases and the Review Process to learn more.