Consolidated Edison Inc.’s (ED) wholly owned subsidiary, Con Edison Development and Panda Power Funds broke ground on a 20-megawatt solar electric generating station in Pilesgrove, New Jersey. The 71,400-panel solar farm — touted to be one of the largest in the U.S. — will have the capacity to power more than 5,100 homes with clean, renewable energy.
The shovel-ready project will create over 100 construction jobs. Consolidated Edison expects the solar farm to begin commercial operation next spring.
Con Edison Development focuses on the development, ownership and operation of renewable and energy infrastructure projects in the Northeast. Through acquisitions as well as greenfield development, Con Edison Development owns, operates and markets 1700 MW of electric generating facilities.
The company has proven expertise in engineering and construction management, start-up and commissioning, and a strong track record of financial stability and regulatory experience.
Panda Power Funds has developed, financed, constructed and operated large-scale energy facilities both domestically and internationally. The company has built the two largest gas-fueled electric generation facilities in the United States totaling 4,400 megawatts of generating capacity. Altogether, the company has raised almost $6 billion to develop and build more than 9,000 megawatts of generating capacity.
Historically, Consolidated Edison has funded a part of its capital programs through earnings dilutive stock issuances. As a result, its outstanding average common shares rose to 283.2 million at the end of the first half of 2010 from 236 million at year-end fiscal 2004. The trend is expected to continue in the future.
However, we must keep in mind that Consolidated Edison is a high dividend-yield defensive stock. As such, the stock recently witnessed mostly lateral movement over the past week rising 1.26%. Since the stock can be dubbed as a bond proxy, the momentum on the stock gathers in a falling interest rate situation.
Consolidated Edison is slated to release its third quarter 2010 numbers on November 1, 2010. Earlier, in the second quarter of 2010 earnings call, Consolidated Edison raised its earnings per share from its ongoing guidance range for fiscal 2010 to $3.25 – $3.45 from the earlier range of $3.10 – $3.30 per share.
This is in line with the Zacks Consensus Estimate of $3.34 for fiscal 2010. The higher range reflects, among other things, stronger-than-forecasted financial performance at Con Edison of New York through cost control efforts and stronger-than-forecasted financial performance at its competitive energy businesses.
Going forward the issuance of common stock would beat down both earnings and dividend. The stock currently yields 4.9%, which is higher than its peers like American Electric Power Company (AEP), Edison International (EIX) and Entergy Corporation (ETR) with yields of 4.6%, 3.5% and 4.4%, respectively.
New York City-based Consolidated Edison is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. Consolidated Edison’s regulated businesses operate through two subsidiaries — Consolidated Edison Company of New York (Con Edison of New York) and Orange and Rockland Utilities (O&R).
Con Edison of New York is a regulated utility that provides electricity to roughly 3.3 million customers, natural gas to 1.1 million customers and steam services to about 1,850 customers, primarily in New York City and Westchester County. O&R serves nearly 400,000 electric and gas customers in southeastern New York State, northern New Jersey and northeastern Pennsylvania.
Consolidated Edison’s unregulated businesses operate through three subsidiaries: Consolidated Edison Development (engaged in infrastructure development), Consolidated Edison Energy (supplies energy in the wholesale market) and Consolidated Edison Solutions (provides retail energy).
Consolidated Edison’s future growth will largely depend on rate increases of its utility subsidiaries. We are currently Neutral on the Zacks #3 Rank (Hold) stock.
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