PNM Resources (PNM) reported encouraging second-quarter results and announced guidance for 2016 that exceeded some analysts’ expectations.
Nevertheless, the stock still trades at a discount to its peers because of uncertainty about whether New Mexico regulators will approve the proposed settlement regarding the ownership and operation of the San Juan Generating Plant.
Although the proposal would reduce emissions from the coal-fired facility at a cost acceptable to all parties involved, environmental advocates have opposed the deal because it wouldn’t shut down all of the coal-burning capacity. The company also has an ongoing rate case in the state.
Resolving these issues would dramatically improve the visibility of PNM Resources’ cash flow and enhance its appeal as a takeover target. PNM Resources rates a buy up to $32 per share.
Digest Editor’s Note: Please see this news release for the latest on the San Juan settlement:
https://finance.yahoo.com/news/san-juan-plan-takes-step-234900891.html
Roger Conrad, Conrad’s Utility Investor, www.ConradsUtilityInvestor.com, 888-960-2759, August 2015
