On Aug 19, 2016, we issued an updated research report on Eversource Energy ES. The company’s investments in growth projects, stable financial conditions and cost saving initiatives have all resulted in a strong financial performance. However, environmental regulations and inconsistent weather patterns may restrict the upside.
Eversource Energy’s second-quarter 2016 operating earnings of 64 cents per share were on par with the Zacks Consensus Estimate while the total revenue lagged the same by 4.5%.
The company pursues organic growth to expand its operations. It is currently focused on upgrading the distribution and utility transmission infrastructure. Keeping with this, during the 2016–2019 period, Eversource Energy plans to make investment of $9.2 billion. These investments will help the company boost the bottom line by 5–7% over the 2015 levels.
Meanwhile, Eversource Energy’s focus on renewable energy generation would help the company meet clean energy mandates by state governments and enjoy incentives offered by state and federal programs.
However, Eversource Energy’s operations are subject to federal, state and local legislative requirements, as well as extensive environmental regulations, related to the emission of greenhouse gases and carbon dioxide, air and water pollution, and waste management.
Eversource Energy also faces challenges due to severe weather conditions and natural calamities like hurricanes and snowstorms, causing breakdown and damage of transmission and distribution lines, and disrupting normal operations. For instance, a mild winter in 2016 lowered the demand for natural gas in the company’s service territories.
Zacks Rank & Key Picks
Eversource Energy currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the utility space include NiSource Inc. NI, CMS Energy Corp. CMS and Pinnacle West Capital Corporation PNW. All the stocks carry a Zacks Rank #2 (Buy).
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CMS ENERGY (CMS): Free Stock Analysis Report
PINNACLE WEST (PNW): Free Stock Analysis Report
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EVERSOURCE EGY (ES): Free Stock Analysis Report
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