Eversource Energy ES announced that it has priced public offering of 6 million equity shares at $86.26 per share. The offering will close on Jun 15, 2020. It grants the underwriters a 30-day option to purchase up to 900,000 additional Eversource Energy common shares. At the end of first-quarter 2020, the company had 332.9-million diluted shares outstanding.
Infusion of additional equity in the capital mix will allow Eversource to lower the total debt-to-capital level, which was 52.2% as of Mar 31, 2020. As it is, the current debt-to-capital level of the company is lower than the industry average of 54.5%.
Given the current volatile market conditions, companies might not want to add new debts in the total capital mix, as it will increase their interest expenses. Another company ONEOK OKE recently priced its public offering of 26-million shares and intends to utilize the net proceeds from the same for general corporate purposes, which may include the repayment of existing indebtedness and the funding of capital expenditures.
Utilization of the Proceeds
Eversource intends to utilize the proceeds from the equity issuance to fund a portion of the $1.1-billion acquisition of Columbia Gas of Massachusetts from NiSource NI. Eversource expects to complete the acquisition by the end of third-quarter 2020, subject to regulatory approvals.
This acquisition will be accretive to Eversource’s earnings. The company already has resources and facilities located in close proximity to Columbia Gas of Massachusetts' customer homes and businesses. With Columbia Gas of Massachusetts, Eversource will be able to serve 626,000 natural gas customers in Massachusetts alone across more than 60 communities.
Its shares have outperformed the industry in the past 12 months.
Zacks Rank & A Key Pick
Eversource currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is NextEra Energy (NEE), carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NextEra Energy NEE delivered positive earnings surprise of 2.4% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 0.1% in the past 90 days.
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