How Duke Energy Aims to Keep Growing

On Friday, Duke Energy (DUK 1.60%) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Duke Energy's merger with Progress Energy helped vault the utility into the uppermost echelon of industry players. But after such a big transaction, when will Duke see earnings start moving back in the right direction? Let's take an early look at what's been happening with Duke Energy over the past quarter and what we're likely to see in its quarterly report.

Stats on Duke Energy

Source: Yahoo! Finance.

Can Duke Energy keep cleaning up this quarter?
Analysts have reined in their views on Duke's earnings in recent months, having cut their earnings-per-share estimates on the utility by a nickel and reducing their full-year 2013 views by $0.03 per share. But the stock hasn't gotten hurt by those moves, as shares have risen 12% since late January.

Duke has benefited from the same trends that have helped just about every player in the business. As natural gas prices have fallen, Duke has shifted away from coal, helping it clean up its operations from an emissions standpoint as well as cutting costs. Moreover, its merger with Progress Energy made it the largest utility in the country by most measures, with the most generating capacity and the most customers, and boosted Duke's already high exposure to the regulated utility business. That gives Duke limited but solid growth prospects, on which it plans to spend a fair-sized fraction of the roughly $6 billion in capital expenditures budgeted for the year.

Duke dominates large-scale energy production, but one threat could come from small-scale local generation. SolarCity (SCTY +0.00%) and other players in the solar industry have realized that financing residential and small-scale commercial solar power installations could become a key to increased adoption of solar technology, and even Duke CEO Jim Rogers has noted that the move could make utility giants less important going forward. Moreover, with wholesale power provider NRG Energy (NRG 4.31%) looking to bypass its utility customers and go directly to consumers with solar installations and natural gas generators, big changes in the industry could be coming and could put hundreds of billions of dollars of traditional utility investment at risk.

Yet Duke doesn't intend to get left behind. It bought two solar projects in California earlier this month, adding to its portfolio of renewable energy production. With the goal of having 6,000 megawatts of wins, solar, and biomass power capacity by the end of the decade, Duke is aiming to be a leader in sustainable energy.

In Duke's quarterly report, watch for signs of how the integration of Progress Energy is going. With some past bumps in the process, Duke just rolled out a new logo this past week, and how customers in affected areas respond should tell whether the company gets a welcome reception in its new coverage areas.

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