Utilities that operate nuclear generation facilities have been hurt by pricing pressures created during the downturn in natural gas prices. As is evident in Exelon's latest release, these pressures still exist. As a generator of base load energy, Exelon has found itself battling the likes of natural gas, solar, and wind power as all three forms continue to expand their reach within the nuclear segment. This triumvirate has caused a depression in the prices that Exelon is able to charge customers.
Friday will bring a direct comparison to Exelon when Duke Energy reports, as it is the largest utility in the country and has a large nuclear presence in the Southeast. I expect that some margin pressure will be felt, but continued benefits from its own merger with Progress Energy should provide similar tailwinds as those Exelon experienced.
A trimmed dividend is leading to a fortress of a balance sheet
As the nation moves increasingly toward clean energy, Exelon is perfectly positioned to capitalize on having the largest nuclear fleet in North America. This strength, combined with an increased focus on balance sheet health and its recent merger with Constellation, places Exelon and its resized dividend on a short list of the top utilities. To determine if Exelon is a good long-term fit for your portfolio, you're invited to check out The Motley Fool's premium research report on the company. Simply click here now for instant access.
The article The Good, Bad, and Ugly for This Nuclear Company originally appeared on Fool.com.Joel South has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool recommends Exelon and Southern Company. The Motley Fool has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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