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Why Dominion Energy’s Free Cash Flow Might Concern Investors

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Dec. 8 2017, Updated 7:30 a.m. ET

Dominion Energy’s free cash flow

Free cash flow is broadly calculated as the difference between operating cash flow and capital investments. It’s an important metric to measure utilities’ (XLU) performances, particularly because of their heavy capital expenditure needs.

Dominion Energy (D) hasn’t reported positive free cash flow in the last five years. A similar trend has been seen in the sector due to increasing capital investments and flat growth in cash flow from operations.

The situation didn’t improve in 2017. So far this year, Dominion Energy reported free cash flow of -$1.9 billion as of September 30, 2017.

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Free cash flow among peers

In comparison, Southern Company (SO) and Duke Energy (DUK) also reported negative free cash flow in the last five years.

NextEra Energy (NEE), the Florida-based renewables giant, seems to be placed much better than its peers in terms of free cash flow. In the last five years, NEE’s free cash flow has been on a strong uptrend before a slight fall in 2016.

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