Solid Capex-Plan Continues to Aid DTE Energy: Time To Buy?

DTE Energy Company DTE follows a disciplined capital spending program to maintain and upgrade the reliability of its electric utility systems with $6.5-billion investment planned over the next 10 years. Notably, DTE Electric’s total investment is expected to be $18 billion over the next 10 years.

Moreover, the company is investing steadily to enhance its renewable generation assets. Over the next 15 years, DTE Electric plans to withdraw a portion of its coal-fired generation and boost the natural gas-fired generation and renewables mix.

Further, the company aims at constructing natural gas turbine plants to provide approximately 1,100 megawatts of energy from the beginning of 2022. Apart from natural gas, the company plans to continue investing in wind and solar to maintain a balanced portfolio. In September 2016, MPSC approved DTE Energy’s two 150 megawatt wind projects. These projects are expected to come online during 2018-2020.

Coming to its earnings performance, DTE Energy delivered a positive earnings surprise in two of the last four quarters, with an average beat of 3.8%. Notably, the company’s Zacks Consensus Estimate for 2017 earnings per share is $5.54, reflecting an annual improvement of 4.9%.

Meanwhile, DTE Energy operates in Michigan, which has witnessed a gradual economic recovery due to an improvement in employment rates and housing and auto markets. An improving economy is likely to boost future utility demand in the state, which in turn is expected to bolster the company’s growth.

The company’s focus on improving its cost structure and directing capital investments toward renewable generation, utility infrastructure and environmental compliance assets have led it to outperform its broader market. Evidently, DTE Energy’s share price increased 9.8% over a year compared with the industry’s 6.4% growth.

 

 

On the flip side, despite investing substantially in renewable projects, increasingly stringent government regulations for curbing emissions remains a major cause of concern for DTE Energy.

Zacks Rank & Other Key Picks

DTE Energy has a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the same space are NextEra Energy, Inc. NEE, PPL Corporation PPL and WEC Energy Group, Inc. WEC, each of which sports a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

NextEra Energy posted positive average earnings surprise of 4.34% in the trailing four quarters. Additionally, its 2017 estimates have increased by 2 cents to $6.73 per share in the last 90 days.

PPL delivered positive average earnings surprise of 6.26% in the last four quarters. Additionally, its 2017 estimates have increased by a penny to $2.18 per share in the last 60 days.

WEC Energy Group delivered positive average earnings surprise of 3.08% in the last four quarters. The company boasts a long-term earnings growth rate of 5.4%.

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