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Analyzing Duke Energy’s Revenues and Earnings Growth Trends

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Duke Energy: Revenues

Duke Energy’s (DUK) revenues have been quite stable during the last few years. Its Piedmont Natural Gas acquisition could impact its top line positively going forward. 

Duke Energy generates more than 95% of its revenues from electric operations, and the rest comes from gas distribution operations. The flattish electricity consumption per customer has been mainly behind Duke Energy’s sluggish revenue growth in the last five years.

DUK NI

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Visionary management

In mid-2014, Duke Energy (DUK) agreed to sell its Midwest merchant power plants, which wiped off a significant risk from its business mix. This occurred just after commodity prices started to drop. Duke’s asset rotation has proven to be aptly timed. Its Progress Energy merger in 2012 improved its earnings growth substantially.

The Piedmont Natural Gas acquisition and investments in midstream seem good for future growth. Duke Energy’s business mix improved last year when it completed the sale of its merchant generation assets in Latin America.

Growth outlook

Duke Energy’s management has given an annual earnings guidance range of $4.50–$4.70 per share for 2017. It is aiming for a long-term earnings growth target of 4%–6% annually through 2021.

Duke Energy’s forecasted earnings growth lies well within the peers’ average earnings growth rate for the next few years. It also aims for a similar dividend growth each year going forward.

Duke Energy’s higher focus on renewables and midstream could bode well for its future earnings growth. Its electric business could keep growing sluggishly due to flattish electricity demand growth over the years. Its increase in gas operations and the Atlantic Coast and Sabal Trail Pipeline could offset the impact to some extent.

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