Xcel Energy Inc.XEL

Morningstar Rating

Stock Research and Analysis

by Travis Miller

With operations stretching from northern Minnesota to Texas, Xcel Energy has positioned itself as an environmental leader, a focus it hopes persuades regulators to boost--or at least sustain--its rates and profits. So far, it has achieved decent regulatory Read more

Bulls Say

Directors have raised the dividend 28% since Xcel sold its merchant generation in 2003. The current $0.95 dividend yields 5% at our fair value estimate.

Renewable portfolio standards in Minnesota and Colorado should smooth regulatory approval for wind and transmission projects.

Carbon restrictions could help ratepayers and shareholders because of Xcel's low-carbon investments.

Environmental awareness in Minnesota and Colorado should create investment opportunities in environmentally friendly energy. Read more

Bears Say

Now that Xcel derives all of its earnings from regulated subsidiaries, state regulators hold the power to determine shareholder returns.

Carbon restrictions could make Xcel's low-cost coal plants, which produce more than half of the company's total power, more expensive for customers.

Energy-efficiency improvements in building construction and appliances could lead to flat or negative demand growth.

If energy usage wanes during the economic slowdown, Xcel could underearn its allowed returns. Read more

Strategy

In just three years, the company shifted its strategy from being a diversified energy company to refocusing on its vertically integrated local utilities. Management now trumpets core values such as customer Read more

Management

Since taking over as CEO, chairman, and president in 2005, Richard Kelly, 61, has done a remarkable thing as the head of a utility: He's won over environmentalists. Apart from huge investments in environmentally friendly energy, he also restructured Read more

Profile

Xcel Energy manages four utilities serving 3.3 million electric customers and 1.8 million natural-gas customers in eight states. Its utilities are Northern States Power, Read more

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