Entergy Corp

US power companies distribute a high percentage of their income to shareholders as dividends. Total returns are a better parameter to evaluate the sector’s performance.

As of July 29, 2016, Public Service Enterprise Group (PEG) is trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 9x.

Analysts seem to be cautious about Xcel Energy stock. RBC raised Xcel Energy’s target price from $49.0 to $53.0 on January 18.

Though FirstEnergy stock currently looks to be trading at a discount, its earnings volatility might make it less attractive for utility investors.

Exelon (EXC) is currently trading at an enterprise-value-to-EBITDA valuation multiple of 8.0x, which is higher than its five-year average.

US nuclear generation accounts for 9% of total US capacity. Its share of total power generation last year accounted for nearly 20%.

Among the total eight analysts covering NRG Energy (NRG), three recommend the stock as a “strong buy,” four recommend it as a “buy,” and one recommends it as a “hold.”

Utilities are often referred to as widow-and-orphan stocks due to their stable dividend payouts and smooth stock movements.

According to Lipper fund flow data, investment-grade bond funds saw net inflows of $2.2 billion during the week ended August 17, 2016.

Currently, DTE Energy (DTE) is trading at a discount compared to its own three-year historical forward dividend yield. Its smooth rally in the last six months could be one of the reasons.

AES Corporation (AES) is currently trading at a forward dividend yield of 3.6%.

Exelon (EXC) stock has corrected nearly 2% in the last year. Including dividends, its returns have come in at ~3%.

Exelon (EXC), the largest nuclear power generator in the US, has warned it could close its Three Mile Island nuclear plant in Pennsylvania if it doesn’t receive state aid.

FirstEnergy (FE), one of the leading competitive utilities, has not increased its dividends since 1Q14.

Leveraged loan funds saw an outflow for the week ending November 25. The quantum of outflows was $742.0 million last week—up from $306.2 million in the previous week.

Entergy’s (ETR) dividend growth has been subdued in the last few years.

US financials and Yankee issuers commanded 34.0% each of the primary market high-grade bond issuance in the week ended August 19, 2016.

Utilities are the highest-yielding equities, with their yields surpassing that of the SPDR S&P 500 ETF (SPY) by more than 100 basis points.

On August 9, 2017, Southern Company (SO) stock had an implied volatility of 11.6%, which is marginally lower than its 15-day average of 12.6%.

Earnings beat consensus analyst estimates in 3Q14, but AES’ share price tumbled by more than 6% on result day due to management’s lowering of the 2014 guidance range.

The industrial sector’s electricity consumption has been strong this year, registering positive year-over-year electricity consumption growth for the last consecutive seven months.

Natural gas prices fluctuate based on changes in demand and supply. Producing its own natural gas will lower NextEra’s gas procurement costs significantly.

First Energy’s 9% exposure to natural gas-fired power generation is quite low. This hurts First Energy, as producing electricity from natural gas provides a competitive advantage for power producers.

Except for the Rocky Mountain, Southeast, and Pacific Southwest, all nine US divisions registered growth in week-over-week electricity production.

Southern Company (SO) has provided handsome returns to its shareholders throughout its history.

Southern’s adjusted earnings per share, or EPS, decreased by more than 20% YoY this quarter. Southern’s adjusted EPS in 4Q14 was $0.38 per share.

Exelon is one of the best-performing stocks in the power utility industry. It’s seen gains throughout the third quarter.

Institutional investors hold most of Dominion Resources’ (D) outstanding shares. As of June 30, 2014, a total of 351.2 million shares were held by 1,069 institutions.

The residential and commercial sectors are the largest electricity consumers. They use almost three quarters of the electricity produced in the U.S.

Contrary to popular belief, falling natural gas prices affect power companies adversely. Unregulated power companies are more exposed to the risk of falling gas prices than regulated utilities.

Natural gas forms the major source of fuel for Southern Company (SO) and constitutes 42% of its installed capacity. This benefits Southern Company to generate electricity at a lower cost.

In 4Q14, nearly 49% of the electricity generated by Southern Company came from natural gas-fired power plants. It was up from 42% last year.

According to analysts’ estimates, Ameren (AEE) could see downside movement of more than 3% going forward based on its target price of $70.8.

For American Electric Power, five analysts recommended a “strong buy,” nine recommended a “buy,” and five recommended a “hold.”

Exelon’s (EXC) EV-to-EBITDA (enterprise value-to-EBITDA) multiple is 7.57x.

According to Wall Street analysts, FirstEnergy (FE) stock has a mean target price of $37.50. Its current market price is $36.50.

Exelon Corporation (EXC) is currently trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) valuation multiple below 8.0x.

What is the dividend outlook? Entergy Corporation’s (ETR) present dividend yield of 4.6% has been driven by dividend growth and price loss. Dividends grew 2% each in 2016 and 2017. The dividend is projected to grow 2% in 2018. What is the projected dividend payout? The company recorded a dividend payout of 48% in 2016. […]

What led to the EPS decline? ETR’s cost of revenue fell 21% in 2016 before rising 15% in 9M17. In addition, gross profit expanded 3% in 2016 before falling 2% in 9M17. Operating expenses rose 8% and 14% in 2016 and 9M17, respectively, due to higher asset impairment and decommissioning charges in both the periods. […]

Credit Suisse upgraded SO’s rating from “underperform” to “neutral” on August 3, 2017. It also modified its price target from $49.0 to $50.0.

Southern Company’s (SO) 50-day MA has crossed below its 200-day MA, which can be considered as a negative sign.

In the past year, XLU has risen ~7%, while Southern Company (SO) fallen 7%, and FirstEnergy (FE) and Entergy (ETR) have corrected by 3% apiece.

Among the four utility stocks under consideration in this series, FirstEnergy (FE) seems to offer the highest possible upside given analysts’ price targets.

Over the last five years, five nuclear power plants have shut down their operations, and another six are planning to close by 2025.

On February 23, 2017, the S&P 500 Utilities Sector surged and closed at its highest level since September 27, 2016.

Exelon is trading at a fair valuation compared to last month. This change is more or less due to its sharp correction in August.

Hybrid utilities including Public Service Enterprise Group are shifting toward regulated operations, eyeing persistently weak wholesale power prices.

Duke Energy (DUK) reported a 17% fall in earnings for 1Q16, mainly due to mild weather and the sale of the company’s Midwest generation business last year.

Public Service Enterprise Group’s (PEG) management reiterated its fiscal 2016 earnings guidance range of $2.80–$3.00 per share.

Among our selected group of utilities, WEC Energy Group (WEC) has the highest expected dividend growth for the next two years. It’s trading at a forward yield of 3.4%.

Utilities are largely trading at a forward yield of about 4%. Their dividend growth is expected to be 4%–6%. Their earnings are expected to grow in this range.

Entergy has released its 2016 guidance, which places earnings at between $4.95 and $5.75 per share.

Entergy (ETR) was trading at a forward dividend yield of 4.7% on March 9, 2016. Its three-year historical average yield is 4.8%.

The US economy contributes about 25.2% towards global GDP. In 3Q15, the US economy grew at an annualized rate of 2.1% due to an increase in consumer spending.

The average ETF weight of the electric utilities stocks in the SPDR S&P 500 ETF (SPY) is 0.08%. Their beta value is less than 1, and thus they’re less volatile.

The US manufacturing PMI fell to 52.8 in November, a decline of 1.3 points from October’s reading of 54.1. This is one of the weakest readings since October 2013.

The six-month beta of the stocks of AES, PPL, Public Service Enterprise, and Entergy was less than one. Meanwhile, NRG Energy’s six-month beta was around one.

According to the Institute for Supply Management, the manufacturing purchasing managers’ index stood at 50.1 in October 2015.

Out of 40 utilities we track, 38 gained during the week ended August 14. The Utility Select Sector SPDR ETF (XLU) gained 2.6%.

Exelon’s fourth quarter earnings missed analysts’ estimates. This caused its share prices to fall. Its share prices fell by more than 3% since it announced its 4Q14 results.

Northman Grumman’s Technical Services segment saw its key metrics fall in both the quarter and fiscal 2014. International sales offset results somewhat.