Rating Change #8
Exelon Corporation (EXC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Electric Utilities industry and the overall market, EXELON CORP's return on equity exceeds that of both the industry average and the S&P 500.
- EXELON CORP's earnings per share declined by 10.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, EXELON CORP reported lower earnings of $3.86 versus $4.09 in the prior year. This year, the market expects an improvement in earnings ($4.09 versus $3.86).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The debt-to-equity ratio is somewhat low, currently at 0.96, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that EXC's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
- EXC's revenue growth has slightly outpaced the industry average of 5.3%. Since the same quarter one year prior, revenues rose by 13.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
Exelon Corporation operates as a utility services holding company in the United States. The company primarily engages in the generation of electricity. It generates electricity from nuclear, fossil, hydroelectric, and renewable energy sources. The company has a P/E ratio of 11.7, equal to the average utilities industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Exelon has a market cap of $28.9 billion and is part of the utilities sector and utilities industry. Shares are up 6.3% year to date as of the close of trading on Tuesday.You can view the full Exelon Ratings Report or get investment ideas from our investment research center.
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