Company Overview and News
The Trump administrations' new tariffs on imported washing machines and solar panels smack of protectionism, but they are not signaling the U.S. is willing to take the kind of broad brush trade actions that would upset the stock market — like killing NAFTA.
Stocks were mixed on Tuesday morning as the earnings reports start to flow and as government offices begin to reopen after a one-day closure. The bull market is now almost nine years old and the trend that keeps winning is for investors to buy on pullbacks. Now it’s time to decide how to position portfolios for 2018 and beyond. (196-1)
FirstEnergy Corporation (FE - Free Report) announced plans of transformational investment, which will help to strengthen its balance sheet by lowering existing debts. The remaining equity proceeds will also be utilized to fund the pension fund and for general corporate purposes. FirstEnergy aims to issue equity worth $2.5 billion, which includes $1.62 billion in mandatory convertible preferred equity and $850 million of common equity. (9-0)
Top-regulated utility Duke Energy’s (DUK) correction has made it relatively cheap in the last month. However, it still seems to be trading at a premium to both its historical average and its peer average. It’s currently trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 11.4x. Its five-year historical average valuation is near 10. (1-0)
Very few utilities are trading at a fair valuation among the S&P 500 Utilities Index (XLU). NextEra Energy (NEE), the largest component of XLU, is trading at an EV-to-EBITDA valuation of 13x—higher than its five-year historical valuation. Duke Energy (DUK) stock is also trading at a valuation multiple of 11.4x, while Southern Company (SO) stock is trading at ~10.5x. (1-0)
Broader utilities (XLU) (IDU) have been falling almost every day so far in 2018. The second-largest utility by market cap, Duke Energy (DUK), has been on a similar downtrend in this period. In the last month, DUK has fallen nearly 12%.
Broader utilities have largely been falling every day since the beginning of 2018 with just a few exceptions. The fall in these defensives, which started around mid-December last year, doesn’t seem to be ending soon. Overvaluation concerns, gradually rising interest rates, and tax reforms could mainly be blamed for utilities’ fall. To add to the woes, citing negative impacts of lower taxes, rating agency Moody’s downgraded 25 US regulated utilities on January 19, 2018. (35-0)
On January 19, 2018, the Utilities Select Sector SPDR ETF (XLU) was trading 7% lower than its 50-day and 200-day moving average levels. XLU’s deep discount to both of the key moving average levels highlights weakness. Its 200-day moving average level at ~$53.57 is expected to act as resistance for XLU in the short term. Currently, it’s trading at $50.14.
We all use utilities, right? Gas, electricity, water, sewer - we all are using these resources day in & day out. As I was driving out for work the other day, I noticed a utility vehicle outside fixing some form of variance they had experienced. It was the big "D" for Dominion (D). My gas is provided by Dominion, and so is that of many other family members and friends up here in northeast Ohio. I love companies that are being used, no matter what, and they have a consistent cash flow of business coming in.
The January 16 "Insurance Update" convinced me that GE is no longer a dividend growth opportunity. (19-0)
Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. (3-0)
“Value will have its day in the sun.” That’s what John Buckingham, a veteran value investor and chief investment officer at AFAM Capital Asset Management, recently told Kiplinger in an interview. (264-1)
Benchmarks closed in negative territory on Thursday following concerns over a likelihood of a government shutdown. Sectors like real estate and utilities, which are considered as alternatives to bonds, declined after yield on 10-year Treasury notes reached its highest level since 2014. Additionally, increase in U.S. gasoline inventories and sharp rise in domestic crude production weighed on oil prices, which in turn led the energy sector downward. (90-0)
Even after a sharp recent correction, utilities have continued to trade at a premium valuation compared to their historical multiples. On January 17, 2018, NextEra Energy (NEE), the biggest constituent of the S&P 500 Utilities Index, was trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) valuation multiple of over 13x. (1-0)
SCANA (SCG) is currently the highest-yielding S&P 500 utility stock with a dividend yield of 5.6%. However, the yield hasn’t increased as the result of a dividend increase but rather due to a fall in the stock’s price. SCANA’s five-year historical dividend yield is at 3.1%, far lower than its current yield.
2017-12-11 - Wilton
2017-12-11 - Wilton
2017-12-03 - Wilton
2017-11-27 - Wilton