Free cash flow
Utilities’ (XLU) cash flow from operations have been trending downward during the last few years due to subdued electricity demand growth. Consequently, utilities’ free cash flows have taken a severe dent in the last few years. Notably, Duke Energy (DUK) has not been able to generate positive free cash flow since 2010.
Free cash flows are used by companies for dividend payments, expansions, and acquisitions. Thus, large negative free cash flow could force a company to take more debt financing.
Peer NextEra Energy (NEE) looks comparatively better placed when it comes to free cash flows. NEE’s free cash flows had been on a solid uptrend before a slight fall in 2016.