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Xcel Energy versus Consolidated Edison in 2019

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Jan. 11 2019, Updated 12:17 p.m. ET

Regulated utilities

Mid-sized regulated utilities Consolidated Edison (ED) and Xcel Energy (XEL) operate in different territories, but they have several aspects in common. Both of the utilities are valued at a market cap of ~$25 billion. They generate a large portion of their revenues from regulated operations. Consolidated Edison offers one of the most reliable dividends. The company has increased its dividend for 44 consecutive years. Xcel Energy, with its sturdy stock performance, outperformed utilities at large in the last several years. We’ll analyze Consolidated Edison and Xcel Energy in this series. We’ll see which utility might outperform in the future.

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Market performance

Xcel Energy stock had a decent run last year before weakness in the defensives (XLU) pulled it down. The stock rose 3% in 2018. Consolidated Edison stock fell almost 10% in 2018 despite reporting better-than-expected quarterly results last year. The company beat analysts’ earnings and revenue estimates in 2018.

For the nine months ending September 30, Consolidated Edison and Xcel Energy reported adjusted EPS growth of more than 7% and 9% YoY. Both utilities’ regulated operations facilitate earnings stability and predictability, which bodes well for stable dividends.

Xcel Energy and Consolidated Edison expect their rate bases to grow ~6% compounded annually through 2020, which will likely enable earnings growth around similar levels. The rate base is the value of the property on which the utility is allowed to earn a specific rate of return, according to the rules set by regulators.

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