RY 136.23 1.1208% TD 82.27 1.5178% SHOP 106.7 0.1502% CNR 178.63 1.0351% ENB 48.81 0.8888% CP 120.08 1.2735% BMO 130.77 0.3222% TRI 211.67 0.408% CNQ 102.44 0.392% BN 56.39 1.2024% ATD 77.26 0.1166% CSU 3730.29 -0.3412% BNS 69.42 1.4023% CM 67.9 -0.6584% SU 49.5 0.0202% TRP 53.8 -2.0215% NGT 47.86 3.6155% WCN 233.02 0.8483% MFC 33.43 1.8276% BCE 46.5 1.087%
Exelon Corporation
EXC Details
Resilient Performance During Q2FY20: Exelon Corporation (NASDAQ: EXC) is a diversified energy company, mainly involved in providing reliable, clean, affordable, and innovative energy products. As at 15 September 2020, the company had a market capitalization of ~$35.24 billion.
Q2FY20 Performance Highlights: For Q2FY20, the company reported GAAP net income of $0.53 per share. Despite the challenging operating conditions caused by the COVID-19 pandemic, the company progressed the development of its capital projects and invested $1.5 billion during the quarter to improve infrastructure, increase reliability and deliver better service to customer. The company’s Adjusted (non-GAAP) Operating Earnings decreased to $0.55 per share in Q2 FY20, as compared to $0.60 per share in Q2 FY19, due to Lower utility earnings, lower capacity revenues and reduction in load due to COVID-19. During the quarter, Exelon Utilities announced that by 2025, it expects 30 percent of vehicle fleets to be electrified and by 2030, that number is expected to increase to 50%.
Earnings Summary (Source: Company Reports)
Outlook: In order to deal with the COVID-19 uncertainties, the company has identified $250 million in cost savings across its operating companies to offset part of the expected unfavorable impacts on operating revenues. For FY20, the company expects its adjusted (non-GAAP) operating earnings to be in the range of $2.80-$3.10 per share.
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
P/E based relative valuation (Source: Refinitiv, Thomson Reuters)
Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months
Stock Recommendation: Over the last one year, the stock has corrected by 23.47% and in the last one month, the stock has corrected by 4.65%. On a Technical analysis front, the stock has a support level of ~$35.6 and a resistance level of ~$39.38. We have valued the stock using a P/E multiple based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in % terms). For the purpose, we have taken peers like Southern Co (NYSE: SO), Entergy Corp (NYSE: ETR), Duke Energy Corp (NYSE: DUK). Considering the company’s cost saving initiatives, its large customer base and resilient performance during Q2FY20, we give a “BUY” recommendation on the stock at the closing price of $36.165, down by 0.26% on 15 September 2020.
EXC Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
ConocoPhillips
ConocoPhillips (NYSE: COP) is an energy company that offers a wide range of low-cost of supply portfolio including resource-rich unconventional plays in North America and conventional assets in North America, Europe, Asia, and Australia. As at 15 September 2020, the company’s market capitalization stood at ~$36.25 billion.
2QFY20 Operational Highlights: For the quarter ending 30 June 2020, the company reported total revenue and other income for the quarter stood at $4,016 million, down from $8,380 million reported in the year-ago period. The year over year decline was due to lower realized commodity prices and production volumes. For the quarter, the company reported adjusted loss of 92 cents per share, as compared to adjusted earnings of $1.01 per share reported in the year-ago period. Over the quarter, the exploration costs decreased from $122 million to $97 million in 2QFY20. The company exited the quarter with a cash balance of $2,907 million, and total long-term debt amounted to $14,852 million.
Income Statement Highlights (Source: Company Reports)
Outlook: Looking ahead, the company is focused on preserving its productive capacity and maintaining a robust balance sheet. With improving crude prices, the company remains on track to bring back production online. It has completely restored production in Alaska in July 2020 and now predicts Lower 48, Alaska production to be 100% restored by September. Particularly, its Montney second pad is likely to begin in 3QFY20.
New Board Appointment: Recently, the company’s Board of Directors elected highly experienced Mr. Eric Mullins to serve as a board member. Mr. Mullins currently serves on the board of Valero Energy Company and he is also on the board of trustees of the Baylor College of Medicine.
Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)
EV/Sales Based Relative Valuation (Source: Refinitiv, Thomson Reuters)
Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months
Stock Recommendation: The stock has corrected by 25.07% in the last three months and is inclined towards its 52 weeks low price, offering a decent opportunity for accumulation. On the technical analyses front, the stock has a support level of ~$32.4 and resistance level of ~$35.67. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in % terms). For the purpose, we have taken peers like Occidental Petroleum Corp (NYSE: OXY), Marathon Oil Corp (NYSE: MRO), and Exxon Mobil Corp (NYSE: XOM). Considering the company’s robust balance sheet, its current trading levels, and valuation, we give a “Buy” recommendation on the stock at the closing price of $33.80, up by 0.84% on 15 September 2020.
COP Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
Disclaimer
The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.