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Xcel Energy’s (XEL) Focus on Clean Energy to Fuel Growth

Zacks

Xcel Energy Inc.’s XEL continuous investments in infrastructure projects, focus on renewable power expansion and demand, driven by improvement in economic condition, are key catalysts.

The Zacks Consensus Estimate for 2020 earnings is pegged at $2.76 per share, indicating growth of 4.55% from the year-ago reported figure. Additionally, long-term (three-five years) earnings growth rate for the company stands at 5.93%.

What’s Driving the Stock?

Xcel Energy continues to invest substantially in its utility assets to provide reliable services to its customers and effectively meet rising electricity demand. These investments are made in transmission, distribution, electric generation and renewable projects. The company has plans to invest $22 billion in the 2020-2024 time period to expand its existing operations.

It is also focusing on clean energy transition. Notably, in 2019, NSP-Minnesota filed its Minnesota resource plan, which runs through 2034. Per this plan, Xcel Energy will achieve an 80% carbon reduction by 2030 and 100% carbon-free electricity by 2050.Apart from the company, utilities like Duke Energy DUK, DTE Energy DTE and Avista Corporation AVA outlined a plan to supply 100% clean energy to customers.

Moreover, the company exited the first quarter of 2020 with total liquidity of $3.1 billion. The recent divestiture and equity issue can further increase the liquidity level to $4.5 billion. Such solid cash position will be sufficient to meet its current obligations.

However,Xcel Energy’s natural gas transmission and distribution operations are exposed to several risks including explosions, leaks and mechanical setbacks. These are likely to impact its operations, thereby affecting its financials. Also, the company’s business activities are susceptible to cyber security risk, which might induce a loss of valuable data.

Zacks Rank & Price Performance

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past three months, shares of the company have gained 3.6% against the industry’s 0.3% decline.

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