NEW YORK (
) 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, growth in earnings per share, increase in net income, increase in stock price during the past year and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 18.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- VECTREN CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past two years indicate the company has sound management over its earnings and share float. We anticipate the company beginning to experience more growth in the coming year. During the past fiscal year, VECTREN CORP increased its bottom line by earning $1.65 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($1.74 versus $1.65).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multi-Utilities industry. The net income increased by 73.6% when compared to the same quarter one year prior, rising from $8.70 million to $15.10 million.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- Net operating cash flow has increased to $81.20 million or 45.00% when compared to the same quarter last year. Despite an increase in cash flow of 45.00%, VECTREN CORP is still growing at a significantly lower rate than the industry average of 95.47%.
Vectren Corporation provides energy delivery services to residential, commercial, and industrial and other customers in Indiana and west central Ohio. The company has a P/E ratio of 17.9, equal to the average utilities industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Vectren has a market cap of $2.2 billion and is part of the
industry. Shares are up 6.4% year to date as of the close of trading on Tuesday.
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