Power - Generation/Distribution Stocks: Financial statements and historical data

How to compare Power - Generation/Distribution companies

Power companies can own generation assets, operate transmission networks or distribute electricity. Their economics depend on contracts, regulation, asset utilisation and the timing of cash collection. Equipment suppliers have a different order-driven business model.

What to check in the company reports

• Identify regulated returns, contracted revenues and exposure to merchant prices where relevant.
• Compare receivables, operating cash flow and debt-service needs with reported profit.
• Review capital expenditure, project commissioning and funding before extrapolating earnings growth.

Reading the valuations

Use asset lives, cash-flow timing, leverage and the return allowed or earned on capital when reviewing valuation. Compare operators with operators and manufacturers with manufacturers.