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DTE Energy (DTE) Rides on Investments and Renewable Expansion

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DTE Energy (DTE - Free Report) has long-term capital expenditure plans to improve its infrastructure and renewable generation portfolio. The company is shutting down coal-fired units and replacing them with clean sources to produce electricity.  

However, this Zacks Rank #3 (Hold) company faces risks related to unfavorable rate revisions and challenges in the energy trading business.

Tailwinds

DTE Energy pursues a rigorous capital investment program to maintain and improve the dependability of its electric and natural gas utility infrastructure. The company plans to invest a total of $25 billion over the next five years. Moreover, it intends to invest $50 billion over the next 10 years to promote the use of electric vehicles, renewable energy and dependability. With these expenditures, DTE Energy should be able to meet its long-term operating earnings growth rate of 6-8%.

Apart from its utility operations, DTE Energy continues to make progress in its non-utility business, which provides diversity to its earnings stream.

DTE is eliminating coal plants to increase its clean energy contribution to the industry. To that purpose, DTE Electric has already decommissioned all 11 coal-fired power units from its Trenton Channel, River Rouge and St. Clair facilities, thereby reducing carbon emissions from its portfolio. The company intends to end its use of coal-fired power plants in 2032 and aims to achieve net-zero carbon emissions for its electric and gas utility operations by 2050.

Headwinds

The new rules or interpretations by the Federal Energy Regulatory Commission, the Michigan Public Service Commission or other regulatory organizations might have an adverse impact on DTE Energy. The length of time that passes between the occurrence of expenses and their recovery in customers' rates may have an effect on the company's capacity to recover costs.

In the near future, DTE Energy anticipates that the market circumstances for its Energy Trading business will continue to be difficult. According to the company, fluctuations in commodity prices and the unpredictability of the effects of regulatory changes and modifications to Regional Transmission Organization operating guidelines might have an effect on this segment's profitability.

Stocks to Consider

Some better-ranked stocks from the same industry are CenterPoint Energy (CNP - Free Report) , IDACORP, Inc. (IDA - Free Report) and Consolidated Edison (ED - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CenterPoint Energy’s long-term (three to five years) earnings growth rate is 7%. The Zacks Consensus Estimate for the company’s 2024 sales indicates an improvement of 1% from the prior-year reported figure.

IDACORP delivered an average earnings surprise of 6.81% in the last four quarters. The Zacks Consensus Estimate for IDA’s 2024 sales suggests an increase of 1.1% from the prior-year reported figure.

Consolidated Edison’s long-term earnings growth rate is 7.4%. The Zacks Consensus Estimate for ED’s 2024 sales calls for an improvement of 3.1% from the prior-year reported figure.

 

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