Unitil Corporation’s UTL strategic investments and long-term sustainable growth will continue to drive its bottom line. Given its strong dividend history and growth opportunities, the company makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment option at the moment.
Growth Projections, Earnings Growth & Surprise History
The Zacks Consensus Estimate for UTL’s 2023 earnings per share (EPS) has increased 1.5% to $2.78 in the past 60 days. This indicates a year-over-year bottom line increase of 7.34%.
The company’s long-term (three- to five-year) earnings growth is pegged at 7.08%. It delivered an average earnings surprise of 58.3% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, Unitil’s ROE is 8.93%, higher than the industry’s average of 4.6%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Dividend History
The utility company has been consistently hiking dividends. Over the past five years, Unitil has increased its dividend five times on a year-over-year basis for an average annual increase of 1.54%. In January 2023, the company’s board of directors approved a dividend hike of 3.8%, which resulted in a quarterly dividend of 40.5 cents per share and an annual dividend of $1.62 per share. Unitil’s current dividend yield is 2.83%, better than the Zacks S&P 500 Composite’s yield of 1.55%.
Systematic Investments & Customer Growth
In 2022, the company had made investments of $1,331.7 million in Net Utility Plant. Unitil’s total revenues were $563.2 million, which included revenues to recover the approved cost of purchased electricity and natural gas in rates on a fully reconciling basis.
As a result of this reconciling rate structure, the company’s earnings are not affected by changes in the cost of purchased electricity and natural gas. Unitil’s utility operation earnings are derived from the return on investment in the three distribution utilities and Granite State.
In 2022, the company served total 195,600 customers and 82.6% of these belonged to the residential sector. UTL’s total customers increased 0.7% from the previous year.
Price Performance
In the past six months, the company’s shares have gained 22.6% compared with the industry’s average growth of 1.9%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are FirstEnergy Corporation FE, CenterPoint Energy, Inc. CNP and NiSource Inc. NI, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FirstEnergy’s long-term earnings growth is pegged at 6.5%. The Zacks Consensus Estimate for the company’s 2023 EPS is $2.5, implying a year-over-year increase of 3.73%.
CenterPoint Energy’s long-term earnings growth is pegged at 7%. The Zacks Consensus Estimate for the company’s 2023 EPS is $1.49, implying a year-over-year increase of 7.97%.
NiSource’s long-term earnings growth is pegged at 6.8%. The Zacks Consensus Estimate for the company’s 2023 EPS is $1.57, implying a year-over-year increase of 6.8%.
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NiSource, Inc (NI) : Free Stock Analysis Report
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Unitil Corporation (UTL) : Free Stock Analysis Report
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