PPL Corporation (PPL), Duke Energy Corp (DUK), FirstEnergy Corp. (FE): Energy Companies Energizing Revenue

The proceeds from the debt issue will reduce the company’s short-term borrowing to $1.27 billion this year compared to $1.97 billion last year. With this debt restructuring, interest expenses will be reduced to $904 million this year compared to $929 million last year.

The company plans to sell 1,240 megawatts, or MW, capacity of its unregulated non-core hydro generation assets. The company will complete this sale in the second half of this year. It is expected that the sale of this asset will generate around $500 million. FirstEnergy Corp. (NYSE:FE) also plans to transfer 79% ownership interest in the 1,980 MW Harrison Plant to its regulated affiliate, Mon Power.

The company has determined the plant at fair market value of $1.3 billion. Considering the lackluster pricing scenario ahead, this transfer will be beneficial for the company. The company will utilize cash used from the proceeds to reduce its debt. The cash flow from this sale and transfer will further support annualized dividend of $2.20 per share with a dividend yield of around 5%.

Conclusion

Duke Energy Corp (NYSE:DUK) rate case settlement with North Carolina should increase revenue, and cost savings from the merger provides good growth prospects. I recommend a buy on this stock.

PPL Corporation (NYSE:PPL)’s rising rate base in Kentucky gives it a positive outlook and fast track determination for the U.K. regulated business will also provide benefits. I recommend a hold on this stock.

FirstEnergy Corp. (NYSE:FE)’s issuance of senior notes will reduce its short-term debt liability, and sale proceeds of hydro assets and the Harrison plant will support dividend yield. I suggest a hold on this stock.

Madhukar Dubey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Energy Companies Energizing Revenue originally appeared on Fool.com and is written by Madhukar Dubey.

Madhukar is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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