Springfield, Massachusetts-based Eversource Energy (ES) is a public utility holding company that delivers energy. Valued at $23 billion by market cap, the company provides electric service to customers in Connecticut, New Hampshire, and western Massachusetts. It also distributes natural gas throughout Connecticut.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and ES perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the utilities - regulated electric industry. ES' rate-regulated business model provides a stable revenue stream across its electric, gas, and water distribution segments. The regulatory environment allows for predictable cost recovery and investment returns, contributing to the company's financial stability. The strategic divestment from offshore wind investments demonstrates a focus on optimizing its asset portfolio and concentrating on core regulated businesses.
Despite its notable strength, ES slipped 9.4% from its 52-week high of $69.01, achieved on Sept. 5, 2024. Shares of ES gained 1.5% over the past three months, outperforming the Dow Jones Industrials Average’s ($DOWI) marginal gains during the same time frame.
In the longer term, shares of ES rose 8.9% on a YTD basis, outperforming DOWI’s YTD marginal losses. However, the stock climbed 7.8% over the past 52 weeks, slightly underperforming DOWI’s 7.9% returns over the same time frame.
To confirm the bullish trend, ES has been trading above its 50-day and 200-day moving averages since early May, with slight fluctuations.
Eversource Energy's performance suffered due to its outsourcing business functions to third-party suppliers. Poor performance by these third parties are harming the company's reputation. Additionally, the company is subject to strict federal, state, and local regulations regarding emissions, pollution, and waste management and changes to these regulations could impact ES' performance.
On May 1, ES shares closed down marginally after reporting its Q1 results. Its EPS of $1.50 matched Wall Street expectations. The company’s revenue stood at $4.1 billion, up 23.6% year over year. ES expects full-year EPS in the range of $4.67 to $4.82.
ES’ rival, PPL Corporation (PPL) shares has taken the lead over the stock, with a 20.4% gain over the past 52 weeks but lagged behind the stock with a 4% return on a YTD basis.
Wall Street analysts are moderately bullish on ES’ prospects. The stock has a consensus “Moderate Buy” rating from the 19 analysts covering it, and the mean price target of $68.56 suggests a potential upside of 9.7% from current price levels.
