Xcel Energy (XEL) Rides on Investments & Clean Energy Efforts

·3-min read

Xcel Energy’s XEL strategic investments in enhancing its clean-energy generation capability and the consistent improvement in its existing natural gas and electric customer base are key catalysts.

The Zacks Consensus Estimate for 2021 and 2022 earnings is pegged at $2.97 and $3.17 per share each, indicating respective growth of 6.45% and 6.67% from the corresponding year-ago reported figures. Additionally, the company’s long-term (three-five years) earnings growth rate stands at 6.11%.

Tailwinds

Xcel Energy continues to invest in its utility infrastructure like transmission, distribution, electric generation and renewable projects for providing its customers with reliable services and effectively meeting rising electricity demand. The company increased its investment plans to $24.3 billion from $23.5 billion in the 2021-2025 time period following the proposed wind and solar projects. Notably, the utility expects long-term earnings growth in the 5-7% range. Also, new rates and an expanding customer base are major drivers.

The company is also focusing on transition to clean energy. In 2019, the utility's subsidiary NSP-Minnesota filed its Minnesota resource plan, which runs through 2034. Per this plan, Xcel Energy targets to achieve 80% carbon-emission reduction by 2030 and 100% carbon-free electricity by 2050.

Other electric utilities are also adopting measures to supply clean and reliable energy to their customers. Some of the companies, namely Duke Energy DUK, DTE Energy DTE and Alliant Energy LNT are planning to provide absolute clean energy by 2050.

Notably, Xcel Energy’s liquidity level totaled $3,590 million as of Apr 26, which is sufficient to meet its near-term obligations.

Headwinds

However, Xcel Energy’s natural gas transmission and distribution operations are exposed to several risks with leaks and mechanical setbacks impacting its normal operations. Also, the company’s business activities are susceptible to cyber security hazards, which might induce a loss of valuable data. Further, it is subject to comprehensive environmental guidelines, which could flare up its operating costs.

Zacks Rank & Price Performance

In the year-to-date period, shares of this currently Zacks Rank #3 (Hold) company have gained 6.5% against the industry’s fall of 4.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Xcel Energy Inc. (XEL) : Free Stock Analysis Report

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