Here's Why You Should Add Exelon (EXC) To Your Portfolio

Earnings estimates for Exelon Corporation (NYSE:EXC) have been revised upward in the past 60 days. The Zacks Consensus Estimate for 2018 and 2019 has moved up 0.6% and 2.3% to $3.12 and $3.15, respectively.

The stock has returned 11.5% in the last 12 months compared with industry’s decline of 3.1%.

Let’s focus on the factors that make Exelon a profitable bet.

Zacks Rank & Surprise History

The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company’s average four-quarter positive earnings surprise is 2.08%. The company’s long-term growth is pegged at 4.60%.

VGM Score

The stock carries an impressive VGM Score of B.

Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Backtested results indicate that stocks with a favorable VGM Score of A or B coupled with a bullish Zacks Rank offer the best investment bets.

Strong Cash Flow

Exelon’s strong free cash flow generation capacity will help it lower debt level by more than $3 billion in the next four years.

Cash flow generation will also support organic utility growth and enable the company to increase dividend distribution rate.

Investments and Cost Savings

Exelon plans to invest nearly $21 billion over the 2018-2021 period on regulated operations to improve reliability of operations. Such systematic investments in regulated assets will drive rate base growth of 7.4% during this period.

Since 2015, the company announced cost reductions of more than $900 million. Cost optimization programs and planned closure of nuclear plants will lower operating and maintenance expenses. The company is targeting to lower operating and maintenance expenses by 3.7% over the 2018-2021 period.

Other Stocks to Consider

In third-quarter 2018, Exelon’s operating earnings of 88 cents per share were in line with the Zacks Consensus Estimate. Other companies from the same industry that reported a beat this earnings season are NiSource Inc (NYSE:NI) , DTE Energy Co (NYSE:DTE) and FirstEnergy Corp (NYSE:FE) .

In the past 30 days, the Zacks Consensus Estimate for earnings in 2018 for NiSource, DTE Energy and FirstEnergy have inched up 1.6%, 1.8% and 0.8%, respectively.

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