The holding company for regulated utilities will benefit from its recent sale of unregulated businesses, analysts said.
"We are upgrading TECO Energy after yesterday's announcement of the sale of TECO Coal," analysts said, adding, "Over the last several years, TECO Energy has shed a number of unregulated businesses that have weighed on shares, and with the sale of Coal, TECO Energy has become a pure-play regulated utility with a reasonable degree of growth and rate certainty."
Shares of TECO closed yesterday up by 3.01% to $18.83.
Separately, TheStreet Ratings team rates TECO ENERGY INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TECO ENERGY INC (TE) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
- TECO ENERGY INC has improved earnings per share by 12.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TECO ENERGY INC reported lower earnings of $0.92 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.92).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Multi-Utilities industry average. The net income increased by 13.6% when compared to the same quarter one year prior, going from $51.40 million to $58.40 million.
- TE, with its decline in revenue, slightly underperformed the industry average of 7.1%. Since the same quarter one year prior, revenues slightly dropped by 1.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for TECO ENERGY INC is currently lower than what is desirable, coming in at 29.93%. Regardless of TE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.04% trails the industry average.
- You can view the full analysis from the report here: TE Ratings Report