Duke Energy Corp (DUK): Is Clean Coal a New Lease On Life?

Duke Energy Corp (NYSE:DUK)’s margins are still the most impressive among the trio. The company boasts an operating margin of 22.31% as compared to 19.95% for AEP, and 16.56% for CenterPoint Energy, Inc. (NYSE:CNP). Duke Energy’s profit margin for the trailing 12-months stands at 9.87% as compared to AEP’s 8.14% and CenterPoint’s 5.38%. The Charlotte, NC-based electric utilities company is equally impressive when it comes to gross margins, with 40%, while AEP and CenterPoint have 37% and 35% respectively.

Valuation

Duke Energy has EPS of $3.29, which is more than double the industry average of $1.26. It also trumps AEP’s earnings of $2.54 per share significantly, and sweeps out CenterPoint’s $0.97.

However, the company appears a little bit more expensive than AEP, in terms of Price-to-Earnings (P/E) ratio. Its P/E of 20.76 times is higher than AEP’s 18.06. Duke Energy’s P/E ratio is also above the industry average of 19.86, but is below CenterPoint’s 24.4.

Nonetheless, when we factor in estimated earnings growth rate for the next five years, Duke Energy appears the cheapest with a PEG ratio of 3.87 times, as compared to AEP’s 3.96, and CenterPoint’s 4.0. However, this is well above the industry average of 0.77 times.

The bottom line

Duke Energy Corp (NYSE:DUK) looks outstanding, fundamentally among its competitors. However, the uncertain future of how the market could react to clean coal in the long-term poses a business risk. Nonetheless, the company’s immediate outlook, at least for the next two years is promising, as clean coal business presents a potential upside before the clean energy campaign finally raises the bar.

The article Duke Energy: Is Clean Coal a New Lease On Life? originally appeared on Fool.com and is written by Nicholas Kitonyi.

Nicholas Kitonyi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Nicholas 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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