IDACORP, Inc’s IDA ongoing investments are expected to strengthen its infrastructure and help meet the demand for its services. The company’s cost management and focus on producing more electricity from clean sources increase the predictability of earnings. Given its growth opportunities and strong dividend history, IDA makes for a solid investment option in the utility sector.
Let’s explore the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for IDACORP’s 2023 earnings per share (EPS) has increased 0.12% to $5.07 in the past 60 days.
The company’s long-term (three- to five-year) earnings growth is 3.7%. IDA delivered an average earnings surprise of 4.6% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, IDACORP’s ROE is 9.65%, higher than the industry’s average of 6.1%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
In the past 12 months, IDA’s total debt to capital was 47.96, much better than the industry’s average of 59.38.
The time to interest earned ratio at the end of first-quarter 2023 was 3.9. The ratio, being greater than one, reflects IDACORP’s ability to meet future debt obligations without difficulties.
The utility company has been consistently paying dividends to its shareholders. IDA paid out $154.3 million and $146.1 million in 2022 and 2021, respectively, as dividends to shareholders.
IDACORP expects to increase its annual dividend rate by 5% or more, subject to approval from the board of directors. Since 2011, the company has raised its yearly dividend by 163% to $3.16 per share. Currently, its quarterly dividend is 79 cents per share, resulting in an annualized dividend of $3.16 per share. IDA’s current dividend yield is 3.05%, better than the Zacks S&P 500 Composite’s 1.52%.
The company expects reliability-focused projects to drive capital expenditure of $650-$700 million in 2023. Owing to systematic investments in generation portfolio strengthening, Idaho Power Hydroelectric Generation will be able to cater to the rising demand from its expanding customer base. The aim of the systematic investment is to provide 100% clean energy to Idaho Power’s customers by 2045.
In the past three months, IDA’s shares have risen 0.4% against the industry’s average decline of 0.5%.
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Other Stocks to Consider
A few other top-ranked stocks from the same industry are Consolidated Edison ED, NiSource Inc. NI, and OGE Energy OGE, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Consolidated Edison’s long-term (three to five years) earnings growth rate is 2%. The Zacks Consensus Estimate for ED’s 2023 EPS indicates an increase of 6.81% from the previous year’s number.
NiSource’s long-term earnings growth rate is 6.9%. The Zacks Consensus Estimate for NI’s 2023 EPS implies an improvement of 6.8% from that recorded in 2022.
OGE Energy’s long-term earnings growth rate is 17.9%. The company delivered an average earnings surprise of 19.9% in the last four quarters.
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