Exelon Corporation is a utility services holding company that engages in energy generation and delivery, as well as power marketing in the USA and Canada. The company is America’s leading energy provider and serves over 10 million customers under six fully regulated brands: Atlantic City Electric, BGE, ComEd, Delmarva Power, PECO, and Pepco. The company was founded in October 2000 following the successful merger of Philadelphia’s PECO Energy Company and Chicago’s Unicom Corporation. Exelon is headquartered in Chicago, Illinois, US.
As a utility company that basically generates and sells electricity, Exelon generally has stable and predictable revenues. But utilities are very regulated industries and the company is essentially at the mercy of regulators in order to maintain its edge. Regulation, however, is not necessarily a bad thing, because it helps Exelon basically maintain its monopoly in most of its operating regions. Still, Exelon is not your typical, old, boring utility company. Instead, the company has actively pursued strategies to grow and diversify its business beyond regulated utilities. Exelon’s merchant generation and competitive retail services have given the company exposure to the entire energy value chain. The company has also cultivated a strong innovation culture that has seen it adopt new technologies and processes early. A product of a merger itself, Exelon has maintained an active portfolio by pursuing inorganic growth that is in line with its core strategy. Some of the company’s major acquisitions include Pepco Holdings and Constellation Energy. The company, however, spun off Constellation Energy in early 2022.
Exelon Corporation first was initially listed on the NYSE. The company, however, transferred the listing of its shares to NASDAQ in 2019, where they trade under the ticker symbol EXC. The stock is categorized in the Utilities sector, under the Utilities-Regulated Electric industry.
Exelon Stock History
Since the 2000 merger, Exelon has implemented one stock split – a 2-for-1 on May 6th, 2004. In the early 2000s, EXC stock traded at a split-adjusted price of below $20. The stock, however, embarked on a strong uptrend in late 2002 that saw it climb to its all-time highs above $65 in July 2008.
The effects of the 2008 Great Recession then triggered a sharp dip to lows of below $35 before the end of that year. Despite the broader recovery of the stock market, the Exelon share price remained under pressure and dipped to below $20 by early 2014. It is only in early 2016 that EXC stock started drifting upwards, managing to climb above $35 by mid-2019. However, the effects of the 2020 Great Lockdown saw Exelon shares revisit the $20-handle, but the subsequent recovery pushed the stock to above $50 in early 2022. The stock currently trades above $40 as of June 2022.
When it comes to the Exelon dividend per share, Exelon has been a willing and generous dividend payer. The company maintains a sustainable payout ratio of about 50% and has consistently averaged a generous dividend yield of around 3%. Exelon stock is, therefore, a classic defensive stock that investors can count on to provide low volatility and stable income.
How to Trade Exelon Stock
Here are some of the factors to consider when trading EXC stock:
- Regulatory Issues
Utility companies, such as Exelon, are under intense regulatory watch, with governments or relevant agencies providing pricing guidelines that essentially dictate profitability levels. Energy has gravitated towards sustainability in recent years, and this has widened the scope of risk for utility companies such as Exelon. Sudden changes in regulation and legislation in areas such as power generation, environmental safety, and taxation could introduce instability to utility companies such as Exelon.
- Interest Rates
Interest rate changes impact the entire equities market, but they are even more impactful on utility stocks. This is because utility firms tend to have high capital expenditure costs. It literally costs an arm and a leg to build and routinely maintain power plants as well as other distribution infrastructure. Utility firms, therefore, tend to have high debt levels and changes in interest rates are very impactful on their bottom line. A hike in interest rates can provide massive headwinds on EXC stock, whereas a rate cut can inspire a higher stock price for Exelon.
The other impact of rate changes is rather subtle. Utility stocks tend to attract conservative investors. And during times of interest rate hikes, there is value to be found in other markets, such as bonds and treasuries, by investors that fit the aforementioned profile.
- New Markets
Despite the tag of ‘boring stocks,’ investors still demand that utility companies explore diversification beyond their core businesses. For Exelon, this involves exploring exposure to areas such as electric vehicles, as well as alternative energy generation, storage, and distribution. If competitors get ahead in such areas, there may be even more pressure on the Exelon share price.
- Periodic Earnings Reports
The Exelon fiscal year mirrors the calendar year. The company releases quarterly and annual earnings reports to provide investors with a clear picture of its business health. Healthy numbers can inspire higher Exelon stock prices, whereas weak figures could provide headwinds to the stock.
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