Tags: Exelon | energy | income | EXC

Exelon: Energy Income Play with Long-term Strength

By    |   Wednesday, 22 Aug 2012 02:27 PM

Exelon (EXC) is fundamentally an income energy stock with a nice fat dividend, recently paying a 5.6 percent yield. Analysts see the stock weaker short term on weather factors but a good long-term strength stock based on its merger with Constellation Energy (CEG).

Exelon is a utility services holding company engaged through its principal subsidiaries in the energy generation and energy delivery businesses.

Generation consists of owned and contracted electric generating facilities, wholesale energy marketing operations and competitive retail supply operations. It has three reportable segments, consisting of the Mid-Atlantic, Midwest, and South and West regions.

The energy delivery business is in two parts. One consists of the purchase and regulated retail sale of electricity and the provision of transmission and distribution services to retail customers in northern Illinois, including the City of Chicago.

The second consists of the purchase and regulated retail sale of electricity and the provision of transmission and distribution services to retail customers in southeastern Pennsylvania, including the City of Philadelphia, as well as the purchase and regulated retail sale of natural gas and the provision of distribution services to retail customers in the Pennsylvania counties surrounding the City of Philadelphia.

Exelon has a market cap of $32.16 billion in a sector, electric utilities, where the average company size is $6.67 billion. Its trailing 12-month P/E ratio is 15.48.

Its projected earnings per share growth for the coming year is negative 1.81 percent, compared to a sector average of 4.58 percent.

Strength


Analysts are mixed on EXC, with buy or outperform calls from Standard & Poor’s Equity Research and Jefferies. Jefferson Research rates the stock underperform.

“The stock has been restricted by the sharp decline in power prices. This has reflected the sharp drop in natural gas prices stemming from the significant increase in inventories due to shale gas development and a mild winter,” S&P analysts wrote June 11.

“However, we believe the scale and financial strength provided by the Constellation Energy merger leaves Exelon well positioned for an improvement in the power markets and/or the implementation of EPA regulations that will require the retirement of old and inefficient coal-fired power plants.”

Exelon next reports on Oct. 24.

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2012-27-22
Wednesday, 22 Aug 2012 02:27 PM
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