Yahoo Finance PNM Resources (PNM) to Gain From Investments in Clean Assets
PNM Resources’ PNM initiatives to provide safe and affordable clean power are expected to boost its performance. The company’s investment in utility infrastructure and development of cost-effective power generation units will help facilitate reliable and affordable power supply.
However, this Zacks Rank #3 (Hold) stock faces risks related to merger delay and nuclear plants operations.
Tailwinds
PNM is focused on organic growth. During 2023-2025, the company plans to invest $2.8 billion to further strengthen its transmission and distribution infrastructure, and improve the reliability of its operations. The capital investment plan will support its earnings growth target of 5% through 2025.
PNM Resources looks forward to exiting coal-fired generation by 2024, replacing the production with renewable sources. It also aims to achieve 80% clean energy by 2040, and reach net zero emissions by 2045, to bring renewable energy sources to its production portfolio.
The New Mexico Public Regulation Commission (NMPRC) has approved PNM’s request to enter into additional power purchase agreements (for renewable energy) for an additional 1,090 MW of energy from solar-PV facilities. This would be in combination with 620 MW of battery storage agreements, with an anticipated 400 MW of solar and 170 MW of battery storage expected to come online in 2023.
Headwinds
PNM Resources, Avangrid and NMPRC filed a combined request before the New Mexico Supreme Court to reject the companies' appeal of the December 2021 NMPRC refusal and return the case to NMPRC. On May 15, 2023, the appeal of the NMPRC's merger denial remained in the jurisdiction of the Court. Oral arguments for the same have been scheduled for Sep 12, 2023. The ongoing delay in completion of the merger can lower the companies’ desired returns.
Stocks to Consider
Some better-ranked stocks from the same industry are IDACORP, Inc IDA, OGE Energy Corp. OGE and NiSource Inc. NI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
IDACORP’s long-term (three to five year) earnings growth rate is pinned at 3.68%. It delivered an average earnings surprise of 4.6% in the last four quarters.
OGE Energy’s long-term earnings growth rate is pegged at 17.89%. It delivered an average earnings surprise of 19.92% in the previous four quarters.
NiSource’s long-term earnings growth rate is estimated at 6.9%. The Zacks Consensus Estimate for NRG’s 2023 earnings per share indicates an increase of 6.8%.
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