Time New York: Wed 28 Sep 13:07 pm  |  Save 15% on H&R Block Online

  
caticonslite_bm_alt

WEC Energy Down to Sell, Increasing Compliance Costs Hurt

Zacks

On Sep 16, Zacks Investment Research downgraded WEC Energy Group, Inc. WEC to a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the current quarter decreased 5% to 57 cents as two estimates moved south over the last 60 days.

Why the Downgrade?

Despite investing substantially in the installation of pollution control equipment, and in the conversion of fuel source to natural gas from coal and retiring certain units, coal remains the primary fuel for power generation at WEC Energy. Even though the company has lowered its carbon emission levels by 23% over the last 15 years, coal still accounts for 50% of the total power generated.

Note that the Environmental Protection Agency’s Clean Power Plan requires the state of Wisconsin to curb carbon emissions by 41% and two-thirds of this target must be achieved by 2022. However, the installation of low-emission infrastructure at generation systems to meet regulatory requirements increases the cost of operations for coal-based utilities in the state.


WEC ENERGY GRP Price and Consensus

WEC ENERGY GRP Price and Consensus | WEC ENERGY GRP Quote

Further, WEC Energy is a holding company with no operations of its own, which means that its ability to meet financial obligations and pay dividends on the common stock is completely dependent upon the ability of its subsidiaries to provide dividends or other payments.

On the other hand, ability of its subsidiaries to make these payments is contingent upon their earnings, cash flows, capital requirements and general financial condition, as well as regulatory limitations. So any decline in contribution from its subsidiaries will adversely impact the financial performance of the company.

Key Picks in the Sector

A few better-ranked stocks to consider in the same space include Spark Energy, Inc. SPKE, Korea Electric Power Corp. KEP and DTE Energy Company DTE. While Spark Energy sports a Zacks Rank #1 (Strong Buy), both Korea Electric Power and DTE Energy carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research
<-- You can share this post with your network,
or give us your opinion and leave a comment.
Be sure to check our RSS feeds for updates.

Automate your Blog