DTE Energy Hits 52-Week High - Analyst Blog

Shares of DTE Energy Company DTE hit a new 52-week high of $73.54 on Mar 28, eventually closing at $73.19. The company has delivered a year-to-date return of about 10.24%, outperforming the S&P return of 0.50%. This Zacks Rank #2 (Buy) company has a market cap of $12.96 billion. The utility has long-term estimated earnings per share growth rate of 6.16%.

What's Driving DTE Energy?

Recently, DTE Energy reported fourth quarter as well as 2013 results that beat the Zacks Consensus Estimate on top as well as bottom lines. The improved performances reflect increased weather-related sales.

DTE Energy's clean energy expansion efforts will bode well for its future growth objectives given the current favorable renewable climate in the U.S. The Echo Wind Park − constructed last year − will commence operations very soon. This will bring the total amount of renewables that DTE has either built or contracted to 9.6% of sales, nearing its 10% goal for 2015. DTE Energy's foray into wind energy generation is well-timed and will lend significant upside in the coming years owing to the Obama Climate Change program and an extension of the wind energy tariff.

DTE Energy is focused on improving its cost structure and directing capital investments toward renewable generation, utility infrastructure and environmental compliance assets. The ongoing efforts to reduce the company's cost structure, along with lower fuel supply costs and reduced cost of providing energy from wind, enabled the company to lower residential electric rates by approximately 6.5% in Jan 2014.

A focus on the cost structure and operational improvements will help the utility attain a 5%–6% long-term EPS growth target and shareholder return in the range of 9%–10%. The EPS growth target comprises 6%–7% of utility growth and 15%–20% non-utility growth. Improvement in the cost structure will also come in good stead for its customers lowering their bills.

DTE Energy's regulated electric and gas utilities in Michigan generate a relatively stable and growing earnings stream. Also, a constructive regulatory environment in Michigan will aid in earnings growth. The Michigan Public Service Commission allows the company's rate case request to be based on a forward test year in contrast to a historical test year as in other parts of the country. In its fourth quarter earnings call, the company boosted its earnings per share guidance for 2014 to the range of $4.20−$4.40 from the prior range of $4.15−$4.39.

Estimate Revisions

For 2014, the Zacks Consensus Estimate increased by 3 cents to $4.33, over the last 60 days. Also, for the first quarter of 2014, the earnings estimate moved northward by 4 cents to touch $1.39 per share.

Other Stocks to Consider

Stocks that are worth considering in the space are Otter Tail Corp. OTTR, Public Service Enterprise Group Inc. PEG and Black Hills Corp. BKH, all with a Zacks Rank #1 (Strong Buy).