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Why TECO Energy Is Poised to Pull Back

By Brian D. Pacampara, CFA - Apr 23, 2013 at 6:00PM

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Market-lagging returns could be written in this 2-Star.

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electric and gas utility TECO Energy (NYSE: TE) has received a distressing two-star ranking.

With that in mind, let's take a closer look at TECO and see what CAPS investors are saying about the stock right now.

TECO facts

Headquarters (founded)

Tampa, Fla. (1899)

Market Cap

$4.0 billion

Industry

Electric utilities

Trailing-12-Month Revenue

$3.0 billion

Management

CEO John Ramil

CFO Sandra Callahan

Return on Equity (average, past 3 years)

10.7%

Cash/Debt

$200.5 million / $3.0 billion

Dividend Yield

4.8%

Competitors

NextEra Energy

Southern

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 10% of the 241 members who have rated TECO believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those bears, fellow Fool Justin Loiseau (TMFJLo), tapped the stock as an unattractive short-term opportunity:

TECO's stock has risen sharply recently as higher natural gas prices make coal more competitive. With 61% of generation capacity coming from coal + 9M tons annual coal mine production, TECO will most definitely benefit in the short run. But I'm making an underperform call because I think TECO might get stuck in a coal rut, where price structures keep it entrenched with coal long after other utilities have diversified and modernized. It might take a while for this to happen, and I'm not positive where TECO's share price will head in the next year.

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Stocks Mentioned

The Southern Company Stock Quote
The Southern Company
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