SCANA: Updated Research Report - Analyst Blog

On May 19, we issued an updated research report on energy holding company, SCANA Corp. SCG.

SCANA delivered positive earnings surprises in three of the last four quarters last year, with an average beat of 8.4%. The company reported strong financial results for the first quarter of 2014 with both the top and the bottom line beating the Zacks Consensus Estimate. The outperformance was backed by improved electric margins from customer growth and rate increases.

SCANA's nuclear expansion project is a catalyst for future earnings growth. Given SCANA's financing plan, construction budget and schedule, we expect it to fund its nuclear expansion project. Management projects 2014 earnings in the range of $3.45–$3.65 per share and expects to achieve the target based on industrial expansion and continued customer growth. As the company's capex escalates with the new nuclear projects and the investments are recognized in the rate base, the regulated earnings power is expected to improve.

SCANA is well positioned in a positive regulatory environment, has a low risk business with outstanding customer growth and operational efficiency. These in turn are favorable for stable cash flow generation and growth. Another positive for shareholders is SCANA's utility business mix. Most of the company's total earnings come from the regulated electricity and natural gas utilities business.

Columbia, SC-based SCANA's operations include generation, transmission, distribution, and sale of electricity to retail and wholesale customers within the state. The company also purchases, sells and transports natural gas to retail customers; provides energy-related risk management services; and acquires, owns and provides financing for nuclear fuel, fossil fuel and emission allowances.

SCANA currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other stocks worth considering in this sector include Calpine Corp. CPN, CPFL Energia S.A. CPL and Dynegy Inc. DYN. All these stocks carry a Zacks Rank #1 (Strong Buy).