Duke Energy Corp (DUK), Exelon Corporation (EXC): Are Mergers Worth It?

Are mergers worth it?
Exelon stock and Duke stock both lay claim to “largest utility” titles, but there are plenty of behemoths already around. As a quasi-control group, let’s compare adjusted EPS growth between Exelon Corporation (NYSE:EXC), Duke, FirstEnergy Corp. (NYSE:FE), National Grid plc (ADR) (NYSE:NGG), and American Electric Power Company, Inc. (NYSE:AEP). For Duke and Exelon stock, we’ll compare year-over-year Q1 growth to 2012 annual growth for FirstEnergy Corp. (NYSE:FE) and National Grid. Here’s how the companies compare:

Source: Yahoo! Finance, e*trade.com, nationalgrid.com. *2012/2011 Half-Year Results

For investors, Duke and Exelon’s mergers haven’t hit home for EPS. However, FirstEnergy Corp. (NYSE:FE)’s and American Electric Power Company, Inc. (NYSE:AEP)’s results show that they aren’t alone when it comes to recent rough patches. With the smallest assets around, National Grid has managed to pull up adjusted EPS 14% in its most recent report.

Do mergers maximize wealth?
Anxious investors were salivating for major margin gains this quarter, but mergers don’t make money overnight. As Exelon’s CEO Christopher Cane recently said, “2012 was a difficult year on the economic front for our sector.” Exelon’s merger added much-needed diversity to its generation fleet, while Duke enjoys steadier sales from an influx of regulated subsidiaries.

Q1 results are in, but the jury’s still out on the ultimate earnings from Exelon Corporation (NYSE:EXC)’s and Duke Energy Corp (NYSE:DUK)’s mergers. Size is no replacement for excellent management and competitive advantage, and investors would do well to consider more than size alone when picking their next dividend stocks.

The article Did This Merger Rock Exelon Stock? originally appeared on Fool.com and is written by Justin Loiseau.

Motley Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity.The Motley Fool recommends Exelon and National Grid plc (NYSE:NGG) (ADR).

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