Exelon Corporation

 

EXC Details
 
EXC Issues Cost Saving Initiatives: Exelon Corporation (NASDAQ: EXC) operates in utility services and is engaged in the generation, delivery, and marketing of energy. On Sept. 12, 2019, BGE issued $400 million aggregate principal amount of its 3.20% senior notes, due Sept. 15, 2049
 
Q3FY19 Operational Highlights for the Period ended 30 September 2019: EXC declared its quarterly results, wherein the company reported total operating revenue at $8,929 million as compared to $9,403 million in Q3FY18. The company reported net income at $760 million as compared to $800 million in the previous corresponding quarter.The quarter witnessed higher utility earnings due to higher regulatory rates across EXC’s subsidiaries including PECO Energy Company (PECO), Baltimore Gas and Electric Company (BGE) and Pepco Holdings LLC (PHI). Within the Generation segment, the business reported decreased nuclear outage days, followed by increased revenue from Zero Emissions Credit (ZECs) in New York and New Jersey. The company reported lower operating and maintenance expense, which was partially offset by decreased capacity prices and lower realized energy prices. PHI reported GAAP net income of $189 million, up from $187 million in the previous corresponding quarter. PECO reported a net income of $140 million on GAAP basis as compared to $126 million in Q3FY18.
 

Q3FY19 Income Statement Highlights (Source: Company Reports)
 
Guidance:The company is adopting cost saving strategies and expects $100 million of cost savings, including savings of $75 million in operating and maintenance expenses and $25 million in other expenses, which is likely to be achieved by FY22. As per the FY19 outlook, the company expects adjusted operating earnings (non-GAAP) per share within the range of $3.00- $3.30 per share to $3.05 - $3.20 per share.
 
Stock Recommendation: The stock of EXC is quoting at $46.005 with a market capitalization of $44.721 billion. The stock is quoting at the lower band of its 52-week trading range of $43.42 - $51.18. The company reported strong utility customer operations performance with every utility achieving top quartile in Service Level and Abandon Rate. The company intends to invest more than $5.4 billion on its electric and gas companies by FY19 end in order to enhance reliability and resilience. The stock is available at an Enterprise Value to Sales multiple of 2.4x on trailing twelve months (TTM) basis as compared to the industry median of 4.5x. Looking at the current trading levels, cost-savings initiatives and business prospects, we recommend a ‘Buy’ rating on the stock at the closed price of $46.005, up 0.71% as on 08 January 2020.

 
EXC Daily Technical Chart (Source: Thomson Reuters)
 
 

Dropbox, Inc.

DBX Details

Revenue Growth with Improved ARPU: Dropbox, INC. (NASDAQ: DBX) is a global collaboration platform that operates through cloud technology and has more than 600 million registered users across 180 geographies.

Q3FY19 Operational Highlights for the Period ended 30 September 2019: DBX declared its quarterly results, wherein the company reported revenue of $428.2 million as compared to $360.3 million in Q3FY18, aided by 14% increase in the number of paying users between periods. Average revenue per user (ARPU) stood at $123.15 as compared to $118.60 in Q3FY18, aided by an increased mix of sales towards the higher-priced subscription plans and the increase in price for the Dropbox Plus plan during the second quarter of FY19. The company reported research and development expenses at $38.9 million. DBX reported sales and marketing expenses at $7.7 million as compared to $8.1 million in Q3FY18. The company reported an improved gross margin of 75.5% as compared to 75% in Q3FY18. The company reported a net loss of $17 million as compared to a loss of $5.8 million in the previous corresponding quarter.


Q3FY19 Income Statement Highlights (Source: Company Reports)

Valuation Methodology: Price to Earnings Multiple Approach

Price to Earnings Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock of DBX closed at $18.46 with a market capitalization of $7.66 billion. The stock is quoting at the lower band of its 52 weeks trading range of $16.08 to $26.49. The company reported a strong quarter aided by 19% top-line growth and margin expansion and is enthusiastic about the early momentum with the new desktop application. Considering the aforesaid facts, we have valued the stock using one relative valuation method i.e. price to earnings multiples. We have taken the peer group Oracle Corp (NASDAQ: ORCL), Microsoft Corp (NASDAQ: MSFT) Apple Inc (NASDAQ: AAPL), etc., and arrived at a target price of lower double-digit (in % terms). Looking at the current trading levels, margin-expansion, improved product appreciation and business prospects, we recommend a ‘Buy’ rating on the stock at the closed price of $18.46, down 0.38% as on 08 January 2020.

 
DBX Daily Technical Chart (Source: Thomson Reuters)

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