Diversified energy company Pepco Holdings Inc. (POM) announced that its subsidiary, Pepco Energy Services, signed a $35 million comprehensive energy savings performance contract with Prince George’s County Maryland Public Schools.
As per the contract Pepco will provide 103 county schools with new infrastructure for effective utilization of energy. The company will emphasize on modernizing heating, cooling and ventilation, conservation of water, improvement in lighting system, energy controls and renewable energy systems.
Pepco will start work on the project immediately, which is expected to save Prince George’s County Public Schools roughly $3 million annually. This project is expected to save $74 million in energy usage over the next 13 years following completion of all phases. It would also help reduce greenhouse gas emissions by 30 million pounds of carbon dioxide a year.
Pepco is consistently entering into efficient energy savings contracts, which not only ensure efficient use of energy but decrease the emission of greenhouse gas. Since 1995 Pepco Energy Services has developed, implemented and financed over $750 million of energy-saving performance contracts for more than 300 customers.
The adjusted earnings for Pepco at the end of the second-quarter 2010 were 56 cents per share, compared with $1.24 at the end of the second-quarter 2009. The Zacks Consensus Estimates for third-quarter 2010, fiscal year 2010 and fiscal year 2011 are 42 cents, 90 cents and $1.23 per share, respectively.
We retain a short-term Zacks #2 Rank on the stock, which translates into a ‘Buy’ rating. We believe the strength of the company lies in its stable customer base, high priced contracts, high dividend yield and gradually-improving fundamentals at its core regulated gas and electric utility operations. However, the company is likely to face stiffer competition from its fully regulated peers with comparable dividend yields. Hence, we maintain a Neutral rating (6+ months) on the stock.
Based in Washington, District of Columbia, Pepco Holdings, through its two operating divisions, Power Deliver and Competitive Energy, involves in transmission and distribution of electricity, as well as delivery and supply of natural gas.
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