PNM Resources' Focus on Affordable Clean Power Bodes Well

Zacks Equity Research

PNM Resources’ PNM long-term investment plans, phased exit from coal-based generation assets, initiatives to provide reliable and affordable clean power will drive performance.

We recently issued an updated research report on this Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company has trailing four-quarter positive earnings surprise of 10.79%, on average. Additionally, the company’s long-term earnings growth is pegged at 5.90%.

What’s Driving the Stock?

PNM Resources continues to invest substantially in its utility assets to provide reliable services to customers. It plans to invest $3.8 billion from 2020 through 2024. From 2017 to 2019, PNM and TNMP collectively invested $1.5 billion in a utility plant that includes substations, power plants, nuclear fuel as well as transmission and distribution systems.

In New Mexico, the company received approvals from both FERC and the New Mexico Public Regulation Commission to acquire the Western Spirit Transmission Line in 2021. The transmission line will bring 800 megawatt (MW) new wind power to the existing grid in the US desert southwest state.

Along with power generation of its own, the company purchases power under long-term power purchase agreements (PPAs). To serve New Mexico retail customers, including a data center located in service territory, PNM has agreements to purchase renewable energy and Renewable Energy Certificates. As of Dec 31, 2019, under these agreements 356 MW, 80 MW, and 15 MW renewable energies are produced from wind, solar-PV and geothermal facilities, respectively, with expiration dates beginning in December 2034 through December 2046.

PNM Resources has a long-standing expertise in fulfilling environmental regulations. The company is focused on developing cost effective power generation units to provide reliable and affordable power. It plans to exit all coal-fired generation by 2031 and to have an emissions-free generating portfolio by 2040.

However, risk of operating in nuclear plants and stringent environmental policies and regulations related to climate change remain headwinds.

Price Performance


 

In the past 12 months, PNM Resources’ shares have lost 20.5% compared with the industry's decline of 6.5%.

Stocks to Consider

Some better-ranked stocks from the same industry are Pacific Gas & Electric Co. PCG, NorthWestern Corp. NWE and Duke Energy Corp. DUK. NorthWestern sports a Zacks Rank #1, while Pacific Gas & Electric and Duke Energy hold a Zacks Rank #2 (Buy).

Long-term earnings growth of Pacific Gas & Electric, NorthWestern and Duke Energy is pegged at 2.50%, 3.10% and 4.70%, respectively.

Pacific Gas & Electric, NorthWestern and Duke Energy have trailing four-quarter positive earnings surprise of 7.35%, 7.62% and 6.53%, on average, respectively.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>