On Monday, BofA Securities updated its assessment of Xcel Energy (NASDAQ:XEL), elevating the price target to $66 from the previous $63 while sustaining a Buy rating on the stock. The adjustment follows Xcel Energy's first-quarter earnings report, which surpassed both the firm's and consensus estimates.
Xcel Energy disclosed its adjusted earnings per share (EPS) for the first quarter of 2024 at $0.88, an increase from $0.76 in the same period last year. This figure also exceeded the BofA and consensus EPS estimates, which were both positioned at $0.76 and $0.77, respectively. The improved EPS is attributed to several factors, including reduced costs and increased allowances.
The company's financial performance in the quarter was positively impacted by a decrease in the cost of gas sold and transported, contributing an additional $0.49 to the EPS. Lower electric fuel and purchased power costs added $0.23, while reduced operations and maintenance (O&M) expenses contributed $0.06. Furthermore, an increase in the allowance for funds used during construction added $0.04 to the EPS.
However, not all factors were favorable in the quarter. Xcel Energy experienced a dip in revenues from natural gas, which reduced EPS by $0.47. Electric revenues also saw a decrease, contributing to another $0.47 reduction in EPS.
Additional financial pressures included higher depreciation and amortization (D&A) and interest expenses, which together decreased EPS by $0.11, along with other charges that brought a $0.02 reduction. Despite these offsets, the overall financial results for the quarter were strong enough to prompt BofA Securities to raise its price target and reaffirm its positive outlook on the energy company's stock.
InvestingPro Insights
Xcel Energy (NASDAQ:XEL) has demonstrated a robust track record, having raised its dividend for 20 consecutive years, according to InvestingPro Tips. This commitment to shareholder returns is complemented by the company's ability to maintain dividend payments for an impressive 53 consecutive years. Investors looking for stability in dividend income might find Xcel Energy's consistent history appealing.
On the financial front, Xcel Energy's market capitalization stands at $29.98 billion, and it currently trades at a P/E ratio of 16.22. While the company's revenue has seen a downturn over the last twelve months as of Q1 2024, with a decline of 11.92%, its gross profit margin remains strong at 43.99%. This suggests that despite revenue fluctuations, the company has managed to maintain profitability.
For those interested in deeper analysis and more InvestingPro Tips, there are additional insights available, including the company's performance relative to near-term earnings growth and its ability to meet short-term obligations. Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for access to these valuable tips.
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