Stock of the Day

August 4, 2020

DTE Energy (DTE)

$131.98
+$0.80 (+0.6%)
Market Cap: $27.35B

About DTE Energy

DTE Energy Company engages in the utility operations. The company's Electric segment generates, purchases, distributes, and sells electricity to various residential, commercial, and industrial customers in southeastern Michigan. It generates electricity through coal-fired plants, hydroelectric pumped storage, and nuclear plants, as well as wind and solar assets. This segment owns and operates distribution substations and line transformers. The company's Gas segment purchases, stores, transports, distributes, and sells natural gas to various residential, commercial, and industrial customers throughout Michigan; and sells storage and transportation capacity. Its DTE Vantage segment offers metallurgical and petroleum coke to steel and other industries; and power generation, steam production, chilled water production, and wastewater treatment services, as well as air supplies compressed air to industrial customers. Its Energy Trading segment engages in power, natural gas, and environmental marketing and trading; structured transactions; and the optimization of contracted natural gas pipeline transportation and storage positions. The company was founded in 1849 and is based in Detroit, Michigan.

DTE Energy Bull Case

Here are some ways that investors could benefit from investing in DTE Energy:

  • DTE Energy has recently been upgraded by multiple analysts, with Guggenheim raising its rating from "neutral" to "buy," indicating strong market confidence in the company's future performance.
  • The stock is currently trading at approximately $131.22, reflecting a solid performance and potential for further growth, especially given its 1-year high of $131.84.
  • The company has a consistent dividend payout, recently declaring a quarterly dividend of $1.09 per share, which translates to an annual yield of 3.49%. This can provide a steady income stream for investors.
  • Institutional ownership is high, with 76.06% of the stock held by institutional investors, suggesting that many large investors have confidence in DTE Energy's stability and growth prospects.
  • DTE Energy operates in the utility sector, which is generally considered a stable investment, especially during economic downturns, as demand for electricity remains consistent.

DTE Energy Bear Case

Investors should be bearish about investing in DTE Energy for these reasons:

  • The company has a relatively high debt-to-equity ratio of 1.77, indicating that it relies significantly on debt to finance its operations, which could pose risks if interest rates rise or if cash flow becomes constrained.
  • Despite recent upgrades, the stock has shown volatility, with a 1-year low of $103.06, suggesting potential risks for investors who may be concerned about price fluctuations.
  • Insider selling has been noted, with key executives selling shares, which could signal a lack of confidence in the company's short-term performance from those who are most familiar with its operations.
  • The current ratio of 0.71 indicates that DTE Energy may have liquidity issues, as it has less current assets than current liabilities, which could affect its ability to meet short-term obligations.
  • While the stock has a consensus rating of "Moderate Buy," there are still five analysts who have rated it as a "hold," suggesting that not all market experts are fully confident in its growth potential.

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