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Investments Aid Consolidated Edison (ED), Price Risk Impacts

Zacks.com logo Zacks.com 7/9/2021

Consolidated Edison ED follows a systematic capital investment plan for infrastructure development. However, commodity price risks are a persistent threat.

This Zacks Rank #3 (Hold) stock delivered an earnings surprise of 4.61%, on average, in the last four quarters. The Zacks Consensus Estimate for 2021 earnings per share is pegged at $4.24, up 0.5% in the past 60 days.

Tailwinds

Consolidated Edison continues to follow a systematic capital investment plan for infrastructure development and maintaining the reliability of its electric, gas and steam delivery systems. It plans to make capital investments of $12.1 billion in aggregate during the 2021-2023 time period.

The company is actively exploring opportunities to enhance renewable generation assets. At the end of March 2021, the company’s clean energy businesses had 2,809 MW AC of utility-scale renewable energy production projects and 62 MW of behind-the-meter renewable energy production projects in service. It generated 2,395 million kWh of electricity from solar projects and 414 million kWh from wind projects during first-quarter 2021. 

Headwinds

Commodity-price risks related to the purchase and sale of its electricity, gas and related derivative instruments can be detrimental to Consolidated Edison’s growth.  Further, storm restoration costs tend to push up the company’s overall operating expenses, which in turn may impact operating results.

The company bears a weak solvency position, with long term as well as current debt pegged significantly higher than its cash reserve, as of Mar 31, 2021.

Price Performance

In the past six months, shares of Consolidated Edison have gained 6.8% compared with the industry’s 2.5% rally.

chart, line chart: Zacks Investment Research © Provided by Zacks.com Zacks Investment Research Image Source: Zacks Investment Research

 

Stocks to Consider

Some better-ranked stocks in the same industry are Otter Tail Corporation OTTR, Entergy Corporation ETR and Hawaiian Electric Industries, Inc. HE, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for 2021 earnings per share for Otter Tail, Entergy and Hawaiian Electric has moved up 2%, 0.2% and 8.8%, respectively, in the past 60 days.

The current dividend yield of Otter Tail, Entergy and Hawaiian Electric is 3.24%, 3.72% and 3.24%, respectively.

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