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Reasons to Add Xcel Energy Stock to Your Portfolio Right Now
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Xcel Energy Inc. (XEL - Free Report) is engaged primarily in the utility business. Its capital investment plan for infrastructure strengthening and clean energy generation is likely to boost its performance. Given its growth opportunities, XEL makes for a solid investment option in the Utility sector.
The company currently carries a Zacks Rank #2 (Buy). Let’s look at the factors that are driving the stock.
Growth Projections & Surprise History of XEL
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is pegged at $3.55 and $3.84, respectively, which indicates year-over-year growth of 6% and 8%.
The consensus estimate for 2024 and 2025 sales is pegged at $14.51 billion and $15.41 billion, respectively, which indicates year-over-year growth of 2.2% and 6.2%.
XEL’s long-term (three to five years) earnings growth rate is 6.40%. It delivered an average earnings surprise of 0.67% in the past four quarters.
XEL Stock’s Dividend Yield
XEL distributes dividends to its shareholders on a regular basis. It has a target dividend payout ratio of 50-60% and aims to increase shareholder value through 5-7% annual dividend hike. The company has increased its dividends for 21 consecutive years, as of February 2024. Its current dividend yield is 3.6%, which is better than the Zacks S&P 500 composite’s average of 1.26%.
XEL Stock’s Return on Equity
XEL’s current return on equity (ROE) is 10.95%, which is more than the industry average of 10.34%. ROE, a profitable measure, reflects how effectively a company is utilizing its shareholders’ funds in its operations to generate income.
Solvency of XEL Stock
XEL’s time-to-interest earned ratio at the end of the second quarter was 2.6. The ratio, being greater than one, reflects its ability to meet future interest obligations without difficulties.
XEL’s Investments & Customer Additions
Xcel Energy is investing substantially in its utility assets to provide reliable services to its customers and effectively meet rising electricity demand. It aims to spend $39 billion during the 2024-2028 period. These investments are aimed at strengthening and expanding its transmission, distribution, electric generation and renewable projects.
XEL’s high quality and reliable services help it to serve an expanding electric and natural gas customer base. The residential electric and natural gas bills of customers in the company's operating regions are lower than the national average, which attracts new customers. In the second quarter of 2024, XEL’s electric customer base increased 1.2% and the natural gas customer base improved 1%.
XEL Stock Performance
Shares of XEL have risen 15.4% in the past three months compared with the industry’s 5.9% growth.
AES delivered an average earnings surprise of 19.18% in the trailing four quarters. The Zacks Consensus Estimate for AES’ 2024 earnings indicates year-over-year growth of 8.5%.
TransAlta delivered an average earnings surprise of 97.99% in the past four quarters. The consensus estimate for TAC’s 2024 earnings has increased 1.4% in the past 30 days.
NiSource delivered an average earnings surprise of 20.64% in the past four quarters. The Zacks Consensus Estimate for NI’s 2024 earnings indicates year-over-year growth of 7.5%.
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Reasons to Add Xcel Energy Stock to Your Portfolio Right Now
Xcel Energy Inc. (XEL - Free Report) is engaged primarily in the utility business. Its capital investment plan for infrastructure strengthening and clean energy generation is likely to boost its performance. Given its growth opportunities, XEL makes for a solid investment option in the Utility sector.
The company currently carries a Zacks Rank #2 (Buy). Let’s look at the factors that are driving the stock.
Growth Projections & Surprise History of XEL
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is pegged at $3.55 and $3.84, respectively, which indicates year-over-year growth of 6% and 8%.
The consensus estimate for 2024 and 2025 sales is pegged at $14.51 billion and $15.41 billion, respectively, which indicates year-over-year growth of 2.2% and 6.2%.
XEL’s long-term (three to five years) earnings growth rate is 6.40%. It delivered an average earnings surprise of 0.67% in the past four quarters.
XEL Stock’s Dividend Yield
XEL distributes dividends to its shareholders on a regular basis. It has a target dividend payout ratio of 50-60% and aims to increase shareholder value through 5-7% annual dividend hike. The company has increased its dividends for 21 consecutive years, as of February 2024. Its current dividend yield is 3.6%, which is better than the Zacks S&P 500 composite’s average of 1.26%.
XEL Stock’s Return on Equity
XEL’s current return on equity (ROE) is 10.95%, which is more than the industry average of 10.34%. ROE, a profitable measure, reflects how effectively a company is utilizing its shareholders’ funds in its operations to generate income.
Solvency of XEL Stock
XEL’s time-to-interest earned ratio at the end of the second quarter was 2.6. The ratio, being greater than one, reflects its ability to meet future interest obligations without difficulties.
XEL’s Investments & Customer Additions
Xcel Energy is investing substantially in its utility assets to provide reliable services to its customers and effectively meet rising electricity demand. It aims to spend $39 billion during the 2024-2028 period. These investments are aimed at strengthening and expanding its transmission, distribution, electric generation and renewable projects.
XEL’s high quality and reliable services help it to serve an expanding electric and natural gas customer base. The residential electric and natural gas bills of customers in the company's operating regions are lower than the national average, which attracts new customers. In the second quarter of 2024, XEL’s electric customer base increased 1.2% and the natural gas customer base improved 1%.
XEL Stock Performance
Shares of XEL have risen 15.4% in the past three months compared with the industry’s 5.9% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks in the same industry are The AES Corporation (AES - Free Report) , TransAlta Corporation (TAC - Free Report) and NiSource Inc. (NI - Free Report) , each currently carrying a Zacks Rank of 2. You can see the complete list of Zacks Rank #1 (Strong Buy) stocks here.
AES delivered an average earnings surprise of 19.18% in the trailing four quarters. The Zacks Consensus Estimate for AES’ 2024 earnings indicates year-over-year growth of 8.5%.
TransAlta delivered an average earnings surprise of 97.99% in the past four quarters. The consensus estimate for TAC’s 2024 earnings has increased 1.4% in the past 30 days.
NiSource delivered an average earnings surprise of 20.64% in the past four quarters. The Zacks Consensus Estimate for NI’s 2024 earnings indicates year-over-year growth of 7.5%.