How Does Exelon’s Debt Ratio Look in Comparison to Peers?

Will Exelon Beat 3Q15 Earnings Estimates?

(Continued from Prior Part)

Total debt

Exelon (EXC) had a total debt of $26.6 billion on its books as of June 30, 2015. 96% of Exelon’s debt is long term in nature. Exelon’s debt as of September 30, 2015, is estimated to be $19.2 billion.

Debt/EBITDA peer comparison

For 3Q15, Wall Street analysts are estimating a debt-to-EBITDA ratio of 10.59x for Exelon. The ratio is low as compared to other power utilities companies in the Utilities Select Sector SPDR Fund (XLU). The debt-to-EBITDA estimates for NextEra Energy (NEE), Dominion Resources (D), Pacific Gas & Electric (PCG), and Xcel Energy (XEL) are 14.09x, 17.47x, 10.73x, and 13.37x, respectively. Exelon’s operations are fairly underleveraged when compared to its peers. PPL (PPL) has the highest debt-to-EBITDA ratio of 25.23x.

The power utilities industry is a capital-intensive industry where businesses require a lot of capital for building power plants, transmission, and distribution networks. Debt-to-EBITDA ratio gives a good idea about the leverage and riskiness of business. This ratio is one of the important parameters considered by the Utilities SPDR ETF (XLU) for giving appropriate weight to utility stocks in its portfolio. Exelon has a weight of 4.8% in XLU.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Exelon Has Underperformed the Utilities SPDR ETF in 2015

• Part 2 - Will Exelon Beat Revenue Estimates as Usual in 3Q15?

• Part 3 - Will Exelon Hit 3Q15 Earnings Estimates?