Business & Finance
Business and Finance
Business and Finance
Wed, June 30, 2010
Tue, June 29, 2010 Allegheny Energy, Dominion Resources, FirstEnergy, PPL Corp. and AZZ
CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Allegheny Energy Inc. (NYSE: [ AYE ]), Dominion Resources Inc. (NYSE: [ D ]), FirstEnergy Corp. (NYSE: [ FE ]), PPL Corporation (NYSE: [ PPL ]) and AZZ Inc. (NYSE: [ AZZ ]).
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Here are highlights from Mondaya™s Analyst Blog:
Allegheny Gets Rate Hike Approval
Allegheny Energy Inc. (NYSE: [ AYE ]) received approval from the Public Service Commission of West Virginia to increase the base rate for its residential consumers. The base rate covers the cost of operation and capital investment of the utilities. This will imply a 4.5% increase in the monthly bill of a residential customer using 1,000 kilowatt hours of power in a month.
Allegheny Energya™s two electric distribution utilities, Monongahela Power and The Potomac Edison Company, operate as Allegheny Power in the state. The company initially asked for a $122 million increase in electricity rates. The request was later revised to $95 million. The base rate revision will increase the monthly bill for a residential customer using 1,000 kilowatt-hours by $4.10 per month to $95.88 from $91.78 as of June 29, 2010.
The adjusted earnings of Allegheny Energy Inc. at the end of first-quarter 2010 were 61 cents compared with 67 cents at the end of first-quarter 2009. The actual results of the quarter were 9 cents lower than the Zacks Consensus expectation of 70 cents. The Zacks Consensus Estimate for 2010 is $2.10 per share and for 2011 is $2.28 per share.
We believe the rate increase was necessary for Allegheny Energy to recover higher costs, as the last increase of rates was approved in 1994 and since then the consumer price index has increased by 45%. We believe the higher generation rates, rising residential usage, ongoing transmission projects and the disposal of retail distribution operations in Virginia are the positive catalysts for the company.
However, we presently maintain a Neutral rating and Zacks Rank # 4 on the stock as these benefits would likely be offset by the pending regulatory approvals for its merger with FirstEnergy, lower industrial demand, higher emission and hedging costs, and lower output.
Based in Greensburg, Pennsylvania , Allegheny Energy Inc. owns and operates electric generation facilities, and delivers electric services to customers in Pennsylvania, West Virginia, Maryland and Virginia. The major competitors of the company are Dominion Resources Inc. (NYSE: [ D ]), FirstEnergy Corp. (NYSE: [ FE ]) and PPL Corporation (NYSE: [ PPL ]).
AZZ Tops, Lifts Guidance
AZZ Inc. (NYSE: [ AZZ ]) posted results for the first quarter of fiscal 2011. The company recorded a 35.6% decline in GAAP net income to $6.4 million from $9.9 million in the year-ago period. Excluding special items, adjusted earnings came in at 57 cents per share, which edged past the Zacks Consensus Estimate of 56 cents.
AZZ is an electrical equipment and components manufacturer, serving global markets of power generation, transmission and distribution as well as general industrial markets. The Fort Worth, Texas-based company, also offers hot dip galvanizing services to the steel fabrication market across the country.
During the quarter, AZZa™s revenue slipped 18.9% to $77.5 million from $95.5 million in the prior-year quarter. The reduction was primarily caused by a 32.9% decrease in Electrical and Industrial Products segment to $37.2 million due to a reduced order intake in third and fourth quarters of fiscal 2010. However, overall revenue decline was partially offset by a marginal 0.5% growth in Galvanizing Services segment to $40.3 million mainly due to increased volumes.
AZZa™s operating income slipped 35.7% year-over-year to $11.3 million, while operating margin dipped 380 basis points (bps) to 14.6%. The decline was primarily attributable to reduced operating leverage caused by sluggish revenues in the Electrical and Industrial Products division. During the quarter, the company also completed the acquisition of Tulsa, Oklahoma-based North American Galvanizing & Coatings Inc., which has eleven facilities located across Colorado, Kentucky, Missouri, Ohio, Oklahoma, Tennessee, Texas and West Virginia.
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