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In the rapidly changing U.S. energy landscape in the early 2000s, one of Eversource Energy's predecessor companies, Northeast Utilities, sought to position itself as a regional and utility industry leader in the pursuit of high-voltage electric transmission projects, as well as smaller energy delivery expansion and reliability projects, to address congestion and reliability issues. Today, the company's strategy remains highly focused on regulated, relatively low-risk growth opportunities including capital spending at the traditional utility, and the build-out of electric transmission and natural gas infrastructure and utility-scale renewable energy capacity in New England.
Based on the $3.15 consensus EPS estimate for 2017, the Eversource shares are trading at a premium to the group's average multiple of 18.6x, reflective of the company’s potential to realize solid long-term EPS of 5% to 7% annually.
Eversource provides electric and gas service to about 3.7 million customers through six regulated utility subsidiaries in New England: Connecticut Light and Power Co. (CL&P), NSTAR Electric Co., Western Massachusetts Electric Co. (WMECO), Public Service Co. of New Hampshire (PSNH), Yankee Gas Services Co. and NSTAR Gas Co.
The company is one of the few largely pure-play electric and gas delivery companies in the U.S. Eversource's strategy has provided innovative and cost-effective solutions to a confluence of regional challenges pertaining to reliability, imminent generating plant closures, renewable portfolio standards, and natural gas pipeline bottlenecks. The company's investments in its core transmission and distribution systems rose 11% in 2016 to nearly $2 billion, while $300 million was invested in its natural gas system, representing a 55% increase in its annual level of investment since 2013.
On June 2, Eversource announced its foray into the water sector with the proposed $1.68 billion transaction for Aquarion Water, New England's largest private water company serving about 230,000 customers. As Eversource's other infrastructure projects work their way through various regulatory arenas and anticipated capital deployment is potentially delayed, Aquarion could provide a more immediate earnings stream particularly as Eversource prepares to divest generating assets held at PSNH under state electric restructuring statutes.
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