Duke Energy 'Progress'es to Lead - Analyst Blog

Duke Energy Corporation (DUK) is moving steadily ahead to acquire Progress Energy Inc. (PGN) in an all-stock deal. Duke Energy estimates the total value of the deal to range between $24 billion and $26 billion. Of this $13 billion will go towards purchase of Progress Energy stock while $11.4 billion is for assumption of Progress's long-term net debt. In what appears to be a consolidation move in the power utility sector, the deal between Charlotte, North Carolina-based Duke Energy and Raleigh, North Carolina-based Progress Energy if fruitful will create the largest U.S. Utility.

Raleigh, North Carolina-based Progress Energy is a pure-play electricity utility with a solid rate base growth opportunity in the long-term. The company engages in regulated electricity operations in the southeastern U.S. as well as non-regulated businesses.

Charlotte, North Carolina-based Duke Energy Corp. is a diversified energy company with a portfolio of domestic and international, natural gas and electric, regulated and unregulated businesses. Its regulated utility operations serve approximately 4 million customers in the five states of North Carolina, South Carolina, Indiana, Ohio and Kentucky, comprising a population of approximately 11 million. Duke Energy's stable U.S. electricity and gas operations provide a relatively stable and growing earnings stream. Looking ahead, higher rates through recent settlement agreements in the states of Kentucky, North Carolina and South Carolina will keep the company's long-term goal of 4% – 6% earnings growth in good stead.

Duke Energy's Commercial Power and International Business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the U.S.

Duke Energy expects to release its fiscal 2010 earnings on February 7, 2011. The company expects earnings for the full year 2010 to come in the range of $1.40–$1.45 per share, in sync with the Zacks Consensus estimate of $1.41 for fiscal 2010. The Zacks Consensus Estimate for fiscal 2011 is $1.34 per share.

Duke Energy currently has a short term Zacks #3 Rank (Hold), which translates into our long-term ‘Neutral' recommendation for the stock.

 
DUKE ENERGY CP (DUK): Free Stock Analysis Report
 
PROGRESS ENERGY (PGN): Free Stock Analysis Report
 
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