Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside |
|---|---|---|---|---|---|---|---|
| 22 May, 24 | XEL | Buy | USD 52.75 | USD 56.44 | USD 59.08 | 71 days | 12.0% |
Data Powered by EOD Historical Data (“EODHD”).
Xcel Energy Inc., through its subsidiaries, engages in the generation, purchasing, transmission, distribution, and sale of electricity. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The company generates electricity through wind, nuclear, hydroelectric, biomass, and solar energy sources, as well as coal, natural gas, oil, wood, and refuse-derived fuels. It also purchases, transports, distributes, and sells natural gas to retail customers, as well as transports customer-owned natural gas. In addition, the company develops and leases natural gas pipelines, and storage and compression facilities; and invests in rental housing projects and nonregulated assets, as well as procures equipment for the construction of renewable generation facilities. It serves residential, commercial, and industrial customers in the portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. The company was incorporated in 1909 and is headquartered in Minneapolis, Minnesota.
Higher Net Profitability: Net Margin of 13.4% in Q1FY24 vs. industry median of 12.6%
Higher Shareholders return: ROE of 2.8% in Q1FY24 vs. industry median of 2.3%
Decreased Free cash flow generation: FCF negative USD487mn in Q1FY24 vs. USD 272mn in Q1FY23
Leveraged balance sheet: Debt/Equity of 1.54x in Q1FY24 vs. industry median of 1.27x
Reliance on Renewable Energy Integration, Regulatory Changes, Operational Risks, and Economic Volatility
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 52.75 | 50.11 | 56.44 | 59.08 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Financial: XEL's Net Income grew by ~17% annually to USD 488 million mainly due to decreased operating expenses during Q1FY24.
Technicals: XEL's share price is currently below both short-term (50-day) SMA and long-term (200-day) SMA with an RSI of 38.31 as of May 22, 2024.
Outlook: XEL expects 2024 earnings of USD 3.50-3.60 per share with plans to boost shareholder returns through EPS and dividend growth.
Given the aforementioned factors, a 'Buy' recommendation has been assigned on the stock at the closing market price of USD 52.75, as of July 3, 2024.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Utilities Industry: Utilities - Regulated Electric
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| XEL Xcel Energy Inc |
0.96 1.45% | 67.36 | 16.14 | 14.86 | 2.08 | 1.68 | 4.01 | 10.95 |
| NEE Nextera Energy Inc |
0.11 0.16% | 70.63 | 15.77 | 17.61 | 4.52 | 2.61 | 7.10 | 12.28 |
| SO Southern Company |
1.16 1.42% | 82.66 | 25.35 | 17.76 | 2.89 | 2.48 | 5.27 | 13.35 |
| DUK Duke Energy Corporation |
2.27 2.15% | 108.03 | 20.54 | 16.34 | 2.60 | 1.59 | 5.34 | 11.98 |
| AEP American Electric Power Co Inc |
0.19 0.21% | 91.84 | 19.17 | 16.18 | 2.58 | 1.91 | 4.83 | 12.39 |
Data Powered by EOD Historical Data (“EODHD”).
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 22, 2024. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: The report publishing date is as per the Pacific Time Zone.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer :
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