Mizuho Securities maintained its Outperform rating on shares of Xcel Energy (NASDAQ:XEL) with a price target of $70.00. The firm's focus was on the company's capital expenditure forecast and regulatory filings, including the Minnesota rate case. Xcel Energy's management is anticipated to update their capital expenditure forecast in the upcoming third-quarter earnings call and provide a refreshed outlook on load growth, which is expected at 3%.
During recent investor meetings in Philadelphia and Boston, Xcel Energy's CFO, Brian Van Abel, discussed the company's growth and infrastructure plans. The company is experiencing significant load growth, particularly in the Texas and New Mexico service areas, driven by the expansion of the Permian Basin's infrastructure. Xcel Energy is prioritizing this development over exploring data center opportunities in the region.
Xcel Energy has also conveyed confidence in its $215 million liability estimate related to the Smokehouse Creek fire, with the expectation that there will be minimal changes to this projection as legal cases are settled. To date, 52 out of 160 cases have been resolved.
The company continues to aim for a funds from operations (FFO) to debt ratio of 17%, a target they plan to uphold while financing their capital expenditure strategy. This financial discipline is part of Xcel Energy's broader effort to sustain growth and manage investments effectively.
Mizuho's reiteration of the Outperform rating and the $70 price target reflects confidence in Xcel Energy's strategic investments and financial targets, as well as the company's ability to manage growth-related challenges and opportunities.
InvestingPro Insights
As Xcel Energy (NASDAQ:XEL) progresses with its strategic investments and financial goals, recent data from InvestingPro offers additional insights into the company's performance and market position. Xcel Energy has demonstrated a strong commitment to shareholder returns, raising its dividend for 20 consecutive years and maintaining payments for 53 years, a testament to its financial stability. The company is also trading near its 52-week high, with a notable return of 19.84% over the last three months, indicating robust investor confidence.
On the financial metrics front, Xcel Energy boasts a market capitalization of $35.67 billion and a price-to-earnings (P/E) ratio of 19.08, suggesting a premium valuation relative to near-term earnings growth. However, it's worth noting that the company's P/E ratio has adjusted down to 17.8 over the last twelve months as of Q2 2024. Despite a slight revenue decline of 9.56% over the same period, Xcel Energy maintains a healthy gross profit margin of 45.29% and an operating income margin of 19.95%, reflecting efficient operations and cost control.
For investors seeking additional insights, there are more InvestingPro Tips available, including analysts' upward revisions of earnings estimates for the upcoming period and predictions of profitability for the year. These insights can be further explored at InvestingPro, where additional analysis and metrics provide a comprehensive view of Xcel Energy's financial health and market prospects.
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