The last year hasn't been a good one for Duke Energy Corporation (NYSE:DUK) and its shareholders. Shares have fallen 20% and earnings have declined as well.

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Some of the challenges facing Duke Energy will be short-lived and others will last for a long time. With the balance between the two, is the stock set up for its best year yet or not?

The good news
Duke Energy has begun transitioning away from wholesale electricity markets to focus more on regulated markets and projects with long-term energy contracts. Part of that move is expanding natural gas distribution, bolstered by the $4.9 billion cash acquisition of Piedmont Natural Gas announced last year. 

The other major transition is the acquisition of renewable energy assets, a huge shift away from the coal plants that used to dominate the company's earnings. In the fourth quarter of 2015, management expected over 300 MW of commercial wind and solar to be added to the portfolio and another 200 MW, at least, is expected in 2016. Between now and 2019, $2 billion or more is going to be added to the renewable energy portfolio, and I would be surprised if the company didn't exceed that by a wide margin. 

On top of those investments, Duke Energy sold its non-regulated Midwest generation business. Wholesale energy markets have collapsed recently and with new generation sources like wind and solar coming on line, it was a good time to divest that business. 

The bad news
A few positive factors are affecting Duke Energy, but a few negatives could have a huge impact on the business. The first is slowing growth in electricity demand. In the past 12 months, total retail electricity demand has grown just 0.3% while demand from residential customers has dropped 0.2%.

With that data, it shouldn't be a surprise that earnings over the past 12 months have declined $0.03 to $3.66 per share. There have been a number of contributing factors like asset sales and foreign exchange, but a slump in earnings for a utility isn't a good sign.

Long term, Duke Energy will need to become a more renewable-focused business in electricity distribution and natural gas may play a larger role in earnings.

This transition will take time
For Duke Energy to become the forward-looking energy company, it could be that management has had to make fundamental strategy changes. Those have begun with the addition of natural gas distribution assets and some renewable energy, but more moves are needed. I'd like to see more investment in renewable energy, especially in a state like North Carolina, which has put policies in place to drive solar growth. But that adoption may take time.

For now, shares are trading at just 20 times trailing earnings and the stock yields 4.5% in a dividend. Both are decent values given Duke Energy's efforts to transition into more stable energy markets.