Wisconsin Energy CorporationWEC

Morningstar Rating

Stock Research and Analysis

by Morningstar Equity Analysts

Significant regulated growth prospects bring above-average earnings potential to Wisconsin Energy. We also like the firm's recent policy shift toward higher dividend payments.

Underinvestment in electricity infrastructure in the state of Wisconsin Read more

Bulls Say

As a regulated operation in an electricity-deficient state, Wisconsin Energy enjoys a guaranteed return and low business risk.

The company's PTF initiative should result in vigorous double-digit compound annual earnings growth during the next five years, compared with projected 2%-3% growth for the industry.

The firm has steadily paid down debt and is focused on minimizing borrowing, targeting a maximum debt-to-capital ratio of 61.5% during the medium term, and a 55% debt-to-capital ratio in the long term.

The company has a solid history of allocating capital rationally and profitably.

Wisconsin Energy recently raised its quarterly dividend by 20%, and indicated that it would raise its target payout ratio to between 40% and 45% of earnings. Read more

Bears Say

A capital-intensive expansion will result in near-term negative free cash flow and may force the company to resort to external financing.

Shareholders will be responsible for any construction cost overruns on the company's new electricity-generation plants.

Risk of future regulatory changes means that the company's 12% return on equity may not be sustained forever. Read more

Strategy

The company is expanding its operating presence in Wisconsin. To address the electricity deficit in the state, Wisconsin Energy will increase its electricity-generating capacity by more than 1,000 megawatts Read more

Management

CEO Gale Klappa and CFO Allen Leverett joined Wisconsin Energy in 2003 after serving at highly respected Southern Company SO. They have brought an increased focus on customer satisfaction and financial performance, both of which were lacking under previous Read more

Profile

Wisconsin Energy is a holding company principally engaged in generating, transmitting, and distributing electricity and natural gas. The company's electric and gas utility Read more

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