Second-quarter earnings are in for most of the more than 200 essential-service companies in our coverage universe. You can find our analysis of these results in this month’s update to the Utility Report Card.
One quarter’s results won’t make or break most companies, but this earnings season was of particular importance for two reasons.
By most valuation metrics, utility stocks trade at levels not seen the early 1960s; this earnings season provided a reality check to see if the companies’ underlying fundamentals lived up to the market’s lofty expectations.
Growth has also stalled out in some industries and economies this year. The past quarter’s earnings and management teams’ outlooks for the remainder of the year provide an early test of how vulnerable companies could be in a bear market or recession.
The vast majority of the names that we cover continue to deliver the goods as businesses, with most meeting or exceeding their guidance.
Although some companies earned higher buy targets and we feel more comfortable with some names that had landed in our doghouse, many of the stocks in our Utility Report Card trade at unsustainably high valuations. At these levels, the risk of a pullback remains elevated.
A baker's dozen of our Portfolio holdings have reported second-quarter results. Here are our key takeaways.
We share our take on the latest deal flow involving companies in our Utility Report Card, the first earnings of the season and hedging against potential downside in utility stocks.
We review the recent mergers and acquisitions news in our coverage universe, including a flurry of deal closures and the sale of the former TXU Corp, now called Oncor.
Eighteen of the holdings in our model Portfolios trade above our value-based buy targets, while several have reached levels where investors should consider taking some of their profits off the table.
The recent spate of equity issuance is yet another sign of frothy valuations in the utility sector, but these moves set the stage for future growth. Investors should bide their time and wait for a pullback to buy our favorite utility stocks.
Some analysts have criticized recent acquisitions by AT&T and Verizon Communications as signs of weakness. We take a different view.
Utility stocks may be overdue for a pullback in the near term, but their future prospects remain undiminished.
The proposed combination of SolarCity and Tesla Motors amounts to little more than a bailout of the fatally flawed renewable-energy company.
The upcoming election season is heating up, but overheated valuations are a bigger concern for investors in utility stocks.
Roger's favorite utilities for investors seeking superior price appreciation by taking calculated risks.
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Warning: Falling Dividends.
Roger's current take and vital statistics on more than 200 essential-services stocks.