Isn't it great to sell things that people really can't live without? I'd imagine that shareholders of French utility company Suez (NYSE:SZE) think so. The company reported solid earnings and pays a sound dividend, and its stock is just a bit under its 52-week high after rising 44% in the past year.
Although I wouldn't say that Suez's financial reports are the easiest you'll ever read, I have to applaud the company for the level of information it provides. You can suss out nearly every salient question about its performance from the material it offers.
Revenue in the first half of the year was up 6% on an organic basis (up 8% as reported). Revenue growth was strongest in the international energy business (up almost 16%), but all four divisions were positive. Overall operating income (organic) grew 9%, with the company's European energy business contributing the lion's share.
Other operating metrics were also solid for the first half. The company generated about $1.8 billion in free cash flow and cut debt by about 6% from the beginning of the year. (It's now slightly less than $900 million.) Partly because of this solid performance, the company intends to hike its dividend by about 10%.
From my perspective, Suez continues to have a very promising outlook. Europe is increasingly deregulating its electricity and gas industries, and Suez is quite literally a global player as well. Almost every region of the world needs more power, more water, and more environmental services from companies like Suez. Though it does have a hefty debt load, the company's solid business generates the cash flow to cover that debt.
My regular readers probably already know that I like European utility companies; I've praised Suez, E.ON (NYSE:EON), Veolia (NYSE:VE), and Scottish Power (NYSE:SPI) in the past. I'm not sure whether I like Suez or E.ON better today, since both have their charms. Suez offers a bit more of a dividend, but E.ON is a bit cheaper and has more balance-sheet flexibility. Either way, though, I think investors would do well to at least consider adding a little international utility exposure to their portfolios.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
