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Duke Energy Corp

Duke Energy Corp. NYSE:DUK. Basic Information . Background, Industry, Competition. Empirical Analysis . Duke Energy: Background.

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Duke Energy Corp

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  1. Duke Energy Corp NYSE:DUK

  2. Basic Information

  3. Background, Industry, Competition Empirical Analysis

  4. Duke Energy: Background • Duke Energy’s segments are U.S. Franchised Electric and Gas, Commercial Power and International Energy. Its regulated utility operations serve four million customers located in five states in the Southeast and Midwest United States.

  5. Industry: Electric Utilities Outlook: Neutral • Negatively affected by slow housing market • Extreme & unpredictable weather • Advancing technology will reduce costs • Falling fuel and purchased power costs(COGS) • Increased regulation

  6. Industry Outlook • Recession has weakened demand • Total industry establishments are expected to drop 0.5% in the next 5 years • Still, revenue is anticipated to grow at 2.0% annually to $115.6 billion in the next five years • Natural gas is gaining popularity • Increased prices -> decreased industry profit margins

  7. Competitive Landscape • Competition is low • four largest participants account for 19% of the industry • Increased acquisition activity • Duke Energy’s subsidiary: Progress Energy and Diamond Acquisition Corporation • Barriers to entry are high and decreasing

  8. SWOT Analysis Strengths • Steady dividend stream • Strong infrastructure Weaknesses • Extensively regulated • Messy merger • Susceptible to commodity & Currency risk Opportunities • "Green" energy • Geographical expansion Threats • Susceptible to unforeseeable issues • Low Credit Rating (BBB+) • Regulatory Risks

  9. Key Figures Market Cap: $44.9B P/E Ratio: 20.15 EPS: $3.17

  10. Historical 1-YR

  11. Dupont Model

  12. Ratios

  13. Ratios

  14. Reasons to Short • Allowed to increase prices by an average of 7.2% • Appealed by North Carolina • Increasing cost of Natural gas • Risky stakes in Latin America (Brazil) • Messy Merger Litigation • CEO Retiring • BBB+ Credit Rating Use 1.5% of Utilities/Telecom to Short DUK @ Market Price

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