Las Vegas Sun

March 29, 2024

NV Energy stock rises on news report

The value of NV Energy Inc. stock increased last week after a national news report suggested it was undervalued.

The stock of the electric utility company closed Friday at $8.83, up from $8.43 on Wednesday, when Barrons.com posted a column about the stocks of NV Energy and CMS Energy, a utility in Michigan.

Barron's said the stock of both companies has been pushed lower since mid-2008 mainly by forced selling of their shares by hedge fund managers, as opposed to the fundamental financial conditions of the companies and their markets.

The newspaper said more than a third of the utilities' shares were held by hedge funds in early 2008. Horizon Asset Management alone held a nearly 30 percent stake in NV Energy in mid-2008, but that declined to about 5 percent last month, Barron's said.

Robert Becker, portfolio manager of the Cohen & Steers Global Infrastructure Fund, told Barron's that the price of the utilities' stocks fell last year because of hedge funds being required to sell shares in order to meet margin calls and shareholders' redemption orders.

This has created an opportunity for investors, as the stocks are under-valued though the companies are well positioned to get through the recession, Barron's said. It said analysts on average expect NV Energy earnings to increase by 13 percent annually in the long run.

"These two companies have extremely attractive valuations,'' Becker told Barron's, adding concerns "are overblown'' about the economies of Nevada and Michigan, both suffering from high unemployment and foreclosure rates.

Despite the recession, NV Energy continues to see growth in Nevada and is investing in renewable energy projects after delaying plans for the Ely Energy Center, a big coal-fired plant.

NV Energy Chief Executive officer Michael Yackira told Barrons.com that while "our growth dampened from 4 percent to 5 percent a year to 1 percent, we are still seeing growth." Foreclosure sales are putting idle houses back on the grid, he told Barron's.

The utility last month reported that the average number of residential, commercial and industrial electric customers in Southern Nevada increased by 0.8 percent, 2.6 percent and 3.8 percent, respectively, from 2007 to 2008.

NV Energy's stock has traded as low as $6.90 and as high as $14.26 in the past year.

Last month, the Las Vegas company reported a fourth quarter loss of $2.1 million or 1 cent per share, a reversal from a profit in the year-ago quarter of $3.7 million or 2 cents per share. NV Energy blamed the loss on costs for two power plants added to its system -- investments that had not yet been included in the company's rate base.

NV Energy, which serves 2.4 million people throughout Nevada and northeastern California, said quarterly revenue fell from $788.6 million to $766.2 million.

Steve Green can be reached at 990-7714 or [email protected].

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