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PNM Resources' Investments & Focus on Clean Energy Bode Well

PNM Resources, Inc.’s PNM consistent investments in strengthening infrastructure and efforts to provide reliable and affordable clean power will enhance its performance. Also, the company’s adequate liquidity will allow it to meet its debt obligations amid the ongoing pandemic.

We issued an updated research report on this presently Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company has a trailing four-quarter earnings surprise of 6.19%, on average. Its long-term (three-five years) earnings growth rate is pegged at 4.87%.

What’s Driving the Stock?

PNM Resources continues to invest substantially in its utility assets for providing reliable services to its customers. It plans to invest $3.3 billion from 2020 to 2023. These investments will lead to 8.9% rate base growth. The company also expects a 5-6% earnings growth rate in the same time frame.

In New Mexico, it received approvals from both the Federal Energy Regulatory Commission and the New Mexico Public Regulation Commission to acquire the Western Spirit Transmission Line in 2021. Currently, in New Mexico, 1,227 megawatt (MW) wind projects are under construction while those with 1,328 MW are under advanced development. We note that the company will play an important role with its expanding transmission assets in the region.

Also, the utility has been undertaking measures to increase its renewable and battery storage capacity, thereby moving toward clean energy. Thus, the company aims to have a clean energy portfolio worth of 2,015 MW by 2022, up from 609 MW in 2019. Further, it has adequate liquidity to meet its near-term obligations and fund capital investments despite the ongoing economic crisis.

Woes

However, the risk behind operating in nuclear plants apart from abiding by the climate change-related stringent environmental policies and regulations remain headwinds to the company.

Price Performance

In the past three months, shares of the company have gained 4.9% against the industry’s decline of 3.9%.

Stocks to Consider

A few better-ranked utilities are Essential Utilities Inc. WTRG, MGE Energy Inc. MGEE and Otter Tail Corporation OTTR, all carrying a Zacks Rank #2 (Buy) at present.

Essential Utilities has a long-term (three to five years) earnings growth rate of 6.01%. It delivered an earnings surprise of 9.67%, on average, in the last four quarters.

MGE Energy has a long-term earnings growth rate of 4.38%. The Zacks Consensus Estimate for 2020 earnings has moved 4.4% north in the past 60 days.

Otter Tail Corporation delivered an earnings surprise of 3.92%, on average, in the trailing four quarters. The Zacks Consensus Estimate for 2020 earnings has been revised 4.7% upward in the past 60 days.

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Otter Tail Corporation (OTTR): Free Stock Analysis Report
 
PNM Resources, Inc. Holding Co. (PNM): Free Stock Analysis Report
 
MGE Energy Inc. (MGEE): Free Stock Analysis Report
 
Essential Utilities Inc. (WTRG): Free Stock Analysis Report
 
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