Utility is one of the most stable sectors for investment, as it deals with basic services. Most Utility players are mature, fundamentally strong and focus on domestic as well as industrial usages. Utility companies are generally regulated. These players reward investors with regular dividends, courtesy of stable performance, earnings and cash flow.
It is always a safe to invest for systematic long-term income. Currently, dividend yield of 3.27% from the Zacks Utility - Electric Power industryis better than the S&P 500 index’s 1.76%.As of now, 95% of S&P 500 companies have reported first-quarter 2018 results. Utility registered 20.9% earnings growth and 3.2% revenue growth in the first quarter. The upside can be attributed to favorable weather conditions, tax reforms and higher return from regulated operations as well as infrastructure investments.
In this article, we do a comparative analysis on two prominent electric power utilities — Duke Energy Corporation DUKand American Electric Power Company, Inc. AEP— to ascertain which one is a suitable investment option right now.
Earnings & Surprise Trend
Duke Energy reported first-quarter 2018 adjusted earnings per share of $1.28 per share, beating the Zacks Consensus Estimate of $1.15 by 11.3%.
American Electric Power reported first-quarter 2018 adjusted earnings of 96 cents, missing the Zacks Consensus Estimate of $1.00 per share by 4%.
Duke Energy has surpassed the Zacks Consensus Estimate in three out of four trailing quarters with an average positive earnings surprise of 3. 89%. American Electric Power has surpassed the Zacks Consensus Estimate in one out of four trailing quarters with an average negative surprise of 2.75%.
Guidance
Duke Energy continues to expect adjusted earnings per share in the range of $4.55-$4.85 for 2018.
American Electric expects 2018 operating earnings in the range of $3.75-$3.95.
Estimates Movement
In the last 60 days, the Zacks Consensus Estimate for Duke Energy’s 2018 earnings moved up by a penny to $4.71. For 2019, estimates remain unchanged at $4.95.
The Zacks Consensus Estimate for 2018 earnings declined by a penny to $3.88 for American Electric Power in the last 60 days. Estimates for 2019 were unchanged at $4.12.
Zacks Rank
Duke Energy holds a Zacks Rank #2 (Buy). The company has a market capitalization of around $53.14 billion.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Electric Power carries a Zacks Rank #3 (Hold). It has a market capitalization of $33.11 billion.
Price Movement