Is Exelon Corporation (EXC) Still Worth It?

Exelon is generating its electricity mostly via nuclear power (55%) and only 3% with coal so that the recent drop in the price of coal won’t ameliorate Exelon’s profit margins. Other companies such as FirstEnergy and American Electric Power heavily rely on coal: 64% for FirstEnergy; 66% for American Electric Power’s. Therefore, if the price of coal will continue to fall, these two latter companies will benefit from this trend. As of February, the price of coal is almost 2.1% below the price of coal in February 2012.

The same goes for natural gas. This year, the price of natural gas is much higher – by nearly 31% – than the price recorded last year. I doubt if natural gas price will reach the low rates reached during the first half of 2012. In any case, if natural gas will continue to rise, it could lower the profit margin of Exelon. Natural gas accounts for 28% of the company’s electricity production.

Exelon is still a strong company that decided to further invest in its operations. The company’s direction might be good in the long run, but in the near future it is likely to become less attractive than other utility companies.

For further Reading:

Will Natural Gas Fall to $2?

Will Exxon Resume Its Rally?

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The article Is This Utility Company Still Worth It? originally appeared on Fool.com and is written by Lior Cohen.

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