Westar Energy Inc.WR

Morningstar Rating

Stock Research and Analysis

by Travis Miller

After operating in survival mode between 2002 and 2006, Westar Energy, Kansas' largest electric utility, is now in the midst of one of the largest capital-investment programs in the United States relative to its size. But to reward shareholders for Read more

Bulls Say

Westar has raised its dividend each of the last five years and now pays $1.20 per share annually, providing a yield in line with other midcap utilities.

The company's capital base, which is a proxy for utility profit growth, should increase at double-digit annual rates during the next five years.

Kansas' retail energy cost-adjustment mechanism included in rates means Westar collects cash more quickly to offset its largest expense item, fuel costs.

Westar's balance sheet has gone from junk status to investment-grade since 2002, providing financing support for its investments. Read more

Bears Say

In 2008, 92% of the energy Westar used to produce its low-cost electricity came from coal and nuclear sources, both environmental targets.

The company's growth plans could require regulators to raise power prices 40% in Westar's service area between 2008 and 2012, which customers might resist.

Higher interest rates or depressed equity prices raise financing costs for the company's planned investments and could lead to further scale-back in growth.

We expect the company to issue an additional 14 million shares by 2012 to finance its growth, diluting existing shareholders. Read more

Strategy

Since the beginning of 2005, Westar has shifted from a fix-it strategy to a growth strategy. A solid balance sheet and improving regulatory relations should support management's plans to make capital Read more

Management

The company has a tarnished history of corporate governance dating to 2002, when then-CEO David Wittig and chief strategic officer Doug Lake were fired for alleged wrongdoing. Wittig and Lake were convicted of money laundering, wire fraud, conspiracy, Read more

Profile

Westar Energy, through its Westar Energy and Kansas Gas and Electric Company subsidiaries, is the largest electric utility in Kansas, providing generation, transmission, Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Dividend Stocks and the Quest for Yield
Watch more