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Duke Energy Corporation Stock Buy Recommendation Reiterated (DUK)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Duke Energy Corporation (NYSE:DUK) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Highlights from the ratings report include:

  • DUK's very impressive revenue growth greatly exceeded the industry average of 13.3%. Since the same quarter one year prior, revenues leaped by 69.1%. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 51.0% when compared to the same quarter one year prior, rising from $288.00 million to $435.00 million.
  • Net operating cash flow has significantly increased by 96.12% to $1,265.00 million when compared to the same quarter last year. In addition, DUKE ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of 5.34%.
  • The debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.35 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • DUKE ENERGY CORP's earnings per share declined by 13.6% 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 year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, DUKE ENERGY CORP reported lower earnings of $3.06 versus $3.84 in the prior year. This year, the market expects an improvement in earnings ($4.34 versus $3.06).

Duke Energy Corporation operates as an energy company in the United States and Latin America. The company operates in three segments: U.S. Franchised Electric and Gas, Commercial Power, and International Energy. The U.S. Duke Energy has a market cap of $51.23 billion and is part of the utilities sector and utilities industry. The company has a P/E ratio of 23.7, above the S&P 500 P/E ratio of 17.7. Shares are up 12.4% year to date as of the close of trading on Wednesday.

You can view the full Duke Energy Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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