In a recent filing with the Florida Public Service Commission (FPSC), Duke Energy (NYSE:DUK) Florida, LLC (DEF) outlined a settlement agreement proposing adjustments to its base rates for the coming years. The agreement, which is subject to FPSC approval, includes a stay-out provision for base rates until the end of 2027, with planned increases in 2025 and 2026.
The settlement, filed today, also allows for the utilization of certain tax benefits in 2027 instead of a revenue hike. Additionally, revenue increases for solar investments will be managed through the Solar Base Rate Adjustment (SOBRA) mechanism.
Under the terms of the agreement, DEF would operate within a return on equity (ROE) band of 9.3% to 11.3%, with a midpoint of 10.3%, based on a 53% equity and 47% debt capital structure.
In other recent news, Duke Energy has experienced significant developments. BMO Capital Markets has adjusted its outlook on Duke Energy, reducing the price target slightly to $109 from the previous $110 while maintaining an Outperform rating. This follows an updated estimate for the company's second-quarter 2024 earnings, which anticipates earnings of $1.01 per share, up from $0.91 per share in the same quarter of the previous year.
Duke Energy also secured approval from the Public Service Commission of South Carolina for a rate increase, effective August 1, 2024. The approval largely supports a previously reached settlement agreement, with some revisions to environmental compliance cost recovery. As a result of the order, Duke Energy will recognize a one-time net pre-tax accounting charge estimated between $30 to $40 million in the second quarter of 2024.
The company's earnings per share estimates remain stable at $5.97, $6.33, and $6.71 for the years 2024-2026, supported by economic development and data center demand. Analysts from Barclays Capital Inc. and BMO Capital Markets Corp. have given Duke Energy an overweight and outperform rating, respectively, with BMO raising its price target from $108 to $110.
InvestingPro Insights
In light of Duke Energy Florida's recent proposal to the FPSC, examining the company's financial health and market performance can offer additional insights. According to real-time data from InvestingPro, Duke Energy (NYSE:DUK) maintains a market capitalization of $81.24 billion, underscoring its significant presence in the Electric Utilities industry. With a P/E ratio of 18.23 over the last twelve months as of Q1 2024, the company trades at a lower multiple relative to near-term earnings growth, which could indicate a valuation that is reasonable in the context of its financials and industry peers. Moreover, Duke Energy's commitment to shareholder returns is evident from its track record of raising dividends for 54 consecutive years, with a current dividend yield of 3.89% as of mid-2024.
InvestingPro Tips highlight the company's low price volatility, suggesting that its stock provides a level of stability in a portfolio. Furthermore, while Duke Energy operates with a significant debt burden, its ability to maintain dividend payments for over five decades might reassure investors looking for consistent income. For those seeking a more in-depth analysis, there are additional tips available on InvestingPro, including analyst revisions and liquidity considerations. Interested readers can unlock these insights and more with a special offer: use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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