MINNEAPOLIS - Xcel Energy Inc. (NASDAQ: NASDAQ:XEL), a utility provider across eight Western and Midwestern states, has announced an underwritten public offering of 18,320,610 shares of its common stock at a price of $65.50 per share. The offering is part of a forward sale agreement, with the closing expected on or about November 5, 2024, subject to standard closing conditions.
In a strategic move, Xcel Energy has entered into separate forward sale agreements with Barclays (LON:BARC) Bank PLC and Bank of America (NYSE:BAC), N.A., referred to as the forward purchasers. These agreements stipulate that Xcel Energy will issue and sell the aforementioned shares to the forward purchasers. An additional 2,748,091 shares may be made available if the underwriters exercise a 30-day option provided to them.
The settlement of these forward sale agreements is anticipated to occur by June 30, 2026, at the latest. Xcel Energy retains the choice of either cash settlement or net share settlement for all or part of its rights or obligations under the agreements. Should Xcel Energy opt for physical settlement, the net proceeds are expected to be allocated towards general corporate activities, which might include capital contributions to its utility subsidiaries, potential acquisitions, and/or repayment of short-term debt.
Barclays and BofA Securities are serving as the joint lead book-running managers for the offering, with Citigroup and Wells Fargo (NYSE:WFC) Securities acting as joint book-running managers. The offering is made under Xcel Energy’s shelf registration statement filed with the Securities and Exchange Commission (SEC), and the relevant prospectus supplement and accompanying prospectus are available on the SEC's website.
Xcel Energy is known for its commitment to reducing carbon emissions and providing clean energy solutions. The company's forward-looking statements indicate that while they have plans for the offering and the use of its proceeds, there are inherent risks and uncertainties that could affect the completion and terms of the offering.
This announcement is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy securities.
In other recent news, Xcel Energy has demonstrated robust financial performance and strategic advancements. The company reported an increase in ongoing earnings per share from $1.23 to $1.25 in the third quarter of 2024, despite a $35 million charge related to a 2011 outage. Xcel Energy reaffirmed its 2024 earnings guidance of $3.50 to $3.60 per share and introduced a 2025 earnings guidance of $3.75 to $3.85 per share.
Analysts at Goldman Sachs (NYSE:GS) and Jefferies have shown confidence in the company's growth, with Goldman Sachs raising Xcel Energy's target to $78 and Jefferies upgrading it to Buy. These decisions follow the company's revised load growth forecast from 2-3% to 5% and an increased five-year capital plan by $6 billion.
In addition to financial growth, Xcel Energy announced a five-year capital investment plan of $45 billion, primarily targeting clean energy and customer electrification. The company also settled a significant number of wildfire claims and is managing increased Operations & Maintenance expenses. These developments underscore Xcel Energy's ongoing commitment to clean energy and infrastructure investment.
InvestingPro Insights
Xcel Energy's recent public offering of 18,320,610 shares at $65.50 per share aligns with the company's strong financial position and growth strategy. According to InvestingPro data, Xcel Energy boasts a substantial market capitalization of $37.87 billion, reflecting its significant presence in the utility sector.
The company's commitment to shareholder value is evident in its dividend history. InvestingPro Tips highlight that Xcel Energy has raised its dividend for 20 consecutive years and has maintained dividend payments for an impressive 53 consecutive years. This track record of consistent dividend growth is particularly relevant to investors considering the new share offering, as it demonstrates the company's financial stability and commitment to returning value to shareholders.
Xcel Energy's P/E ratio of 19.81 suggests that investors are willing to pay a premium for the company's earnings, possibly due to its strong market position and growth prospects. This valuation metric, combined with the InvestingPro Tip noting that the stock generally trades with low price volatility, may be attractive to investors seeking stable returns in the utility sector.
The company's financial health is further underscored by its profitability over the last twelve months, as indicated by another InvestingPro Tip. This profitability, coupled with analysts' predictions of continued profitability this year, supports Xcel Energy's ability to fund its operations and potential expansions through the capital raised in this offering.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide valuable context for Xcel Energy's financial strategy and market position.
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