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New data showing a weaker job market and slower retail sales has led analysts to believe the Federal Reserve is less likely to raise interest rates. For a utility like Exelon, interest rates are a major factor in its business because it borrows billions of dollars to build and maintain the power grid.
When rates stay low or fall, it costs the company less to fund these projects. Lower rates also make the dividends paid by utility stocks more attractive to investors compared to the yield they can get from safe investments like government bonds.
Source: WSJ
Exelon's foundation has invested in two new companies, Public Grid and Buckstop, as part of its initiative to support sustainable energy technology. These investments are focused on improving energy affordability and grid reliability as electricity demand grows. While these partnerships help Exelon stay close to new technology in the energy sector, they are small investments through its foundation. They do not change the core financial outlook for the company's main regulated utility business.
Source: Business Wire
The company has secured more than 1 billion dollars in customer protections through new transmission security agreements. These deals ensure that large power users, like data centers and advanced manufacturers, pay for the specific grid upgrades needed to serve them.
This is a win for the company's relationship with regular customers and regulators. By making large users cover these costs, the company can modernize its system without placing the entire bill on families and small businesses. This helps protect the company's ability to get future rate increases approved by showing it is keeping costs for the average customer as low as possible.
Source: Business Wire
The company reported second-quarter profit of $0.43 per share, which was essentially in line with what analysts expected. Revenue reached 5.97 billion dollars, ahead of the 5.44 billion dollars anticipated. Management also confirmed its full-year profit target of $2.81 to $2.91 per share.
The most important takeaway for long-term owners is that the company is sticking to its plan to grow earnings by 5 to 7 percent annually through 2029. It is funding this by spending heavily on its power lines and poles, which allows it to earn a regulated return on that investment. Even as it trimmed its forecast for data center demand by 16 percent, it is keeping its 41 billion dollar five-year investment plan unchanged, suggesting there is plenty of other grid work to keep the business growing.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The company declared a quarterly dividend of $0.42 per share, payable on September 15. This is a routine move for a large utility, where steady cash payments are a core part of why people own the stock. It reflects the predictable nature of the company's regulated business model.
Source: Business Wire
The company has a very consistent habit of meeting or slightly beating expectations. This suggests management has a firm handle on its costs and a clear view of its regulated income.
| Expectation | |
|---|---|
| EPS | $0.84 |
| Revenue | $6.82B |