Small Cap Strategist is published by Crystal Equity Research an independent research resource on small capitalization stocks. Follow along as we discuss the most recent trends in the small-cap sector, investigate interesting companies and pan a few not-so-promising stocks.
has generating capacity just over 11,000 megawatts, of which about 10% is
sourced from its Fermi 2 nuclear power plant.The company has filed a license application
with the NRC to expand the station with the installation of another boiling
water reactor made by General Electric-Hitachi.The application was filed five years ago and, once approved, the plant
could require over ten years for construction and commissioning.Nothing happens quickly with nuclear power
Energy is habitually profitable.In the most
recently reported twelve months, the company generated a net profit of $647
million on $9.3 billion in total sales.During this same time period cash flow from operations was $2.3 billion,
representing a cash conversion ratio of 25%.The company has been paying out about two thirds of earnings as
dividends, which is expected to amount to a dividend of $2.62 per share in the current
fiscal year.At the current price level
the dividend yield is 4.0%.
consensus growth rate among analysts following DTE Energy is near 5.0%.Coupled with the forward dividend yield of
4.0%, the growth rate suggests a fair value price/earnings ratio near 9.0, a multiple
well below the current forward price/earnings multiple of 15.8 times.
DTE fails the PEG Ratio check, a market approach to valuation using comparable
multiples provides a bit of encouragement for shareholders. A consistent operating track record and that
generous dividend help drive valuation.The stock is trading nearer to its five-year high price/earnings
multiple than the low end of its price/earnings ratio range.However, DTE is trading well below the
average for its peer group of regulated utilities.
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of the Small
Cap Strategist web log, Crystal Equity
Research nor its affiliates have a beneficial interest in the companies