Wisconsin Energy Touches 52-Week High - Analyst Blog

On Mar 17, 2014, the shares of Wisconsin Energy Corporation WEC climbed to its 52-week high of $45.87. The share price was finally closed at $45.66, up 0.8% from the previous day's closing. We believe that the company's favorable fourth-quarter 2013 results, payment of increased dividend, a rise in 2014 capital spending program and higher number of electricity and natural gas customers in 2013 than the year-ago level, led to the surge in share price.

In the fourth quarter of 2013, Wisconsin Energy's operating earnings of 63 cents per share surpassed the Zacks Consensus Estimate by 8.6%. The results were also ahead of the year-ago quarter's operating earnings of 43 cents by 46.5%. Improvement in earnings was primarily driven by colder winter temperatures, lower property and revenue taxes and decreased share counts. The company's earnings surpassed the Zacks Consensus Estimates in the last 4 quarters, with an average surprise of 8.4%.

Wisconsin Energy's initiatives including distributing incremental dividends and share repurchase program will help to improve shareholders' value. On Mar 1, 2014, Wisconsin Energy paid quarterly dividend of 39 cents per share on the company's common stock, up around 2% from the previous payout of 38.25 cents per share. As far as Wisconsin Energy's share repurchase plan in concerned, the company repurchased roughly 3.0 million shares for $126 million in 2013.

We note that the company continues to show its efficiency in improving its operating cash flow. In 2013, the company's cash flow from operating activities climbed around 4.9% to roughly $1.23 billion from $1.17 billion in the year-ago comparable period. Strong cash generation efficiency supports the company's future projects.

We appreciate Wisconsin Energy's steady effort towards improving and modernizing its utility infrastructure. The company plans to invest $3.2–$3.5 billion in its several ventures within a time span of 2014 to 2018. Of which, around $0.71 billion is expected to be invested in 2014. As Wisconsin Energy continues to increase customer counts, we believe 3.4% anticipated year-over-year growth in capital expenditure will enable the company to provide reliable services to higher number of customers.

Apart from upgrading infrastructure, Wisconsin Energy is also diversifying its power generation portfolio and expanding its renewable properties. In Nov 2013, the company completed its biomass project in Rothschild. Subsequently, these initiatives will enable the company to maintain governments' renewable standard for electricity generation.

Wisconsin Energy currently has a Zacks Rank #2 (Buy). Some other stocks looking equally good in the utilities industry include Public Service Enterprise Group Inc. PEG, Exelon Corporation EXC and Avista Corporation AVA. While Public Service Enterprise and Exelon hold a Zacks Rank #1 (Strong Buy), Avista Corporation carries a Zacks Rank #2 (Buy).